Bridge to Europe as Osborne in Yorkshire leads with eurozone nations

Speaking during a visit to mark a reduction in tolls across the Humber Bridge, the Chancellor said: “We need the eurozone to resolve their crisis. We need the countries of the euro to stand behind their currency.

“We do need the countries of the euro to work more closely together to sort out their problems.

“Britain doesn’t want to be a part of that integration - we’ve got our own national interests - but it is in our economic interest that they do sort themselves out. The biggest boost that could happen to the British economy this autumn would be a resolution of the euro crisis.”

European Council President Herman van Rompuy will present a paper setting out options for the way forward to EU leaders at the summit next Thursday.

David Cameron is expected to resist proposals favoured by French president Nicolas Sarkozy which would effectively create a two-speed Europe, with the 10 non-euro countries sidelined from decisions affecting the single currency.

A meeting in Paris today between the two leaders was initially intended to be a full-blown Anglo-French summit involving a number of ministers from both sides, but was downgraded to a brief meeting over lunch to prepare the ground for next week.

Mr Sarkozy will meet German Chancellor Angela Merkel on Monday, amid expectations that the two biggest powers in the eurozone will agree a joint plan to drive through at the summit.

The French president said last night that he and Mrs Merkel would unveil proposals to try to lift Europe out of its debt crisis and “guarantee” its future.

“France will push with Germany for a new European treaty refounding and rethinking the organisation of Europe,” Mr Sarkozy said.

Mrs Merkel this morning said the 17 eurozone nations must be subjected to “legally binding regulations” to ensure that they do not fall back into excessive debt.

But it is unclear whether that will require treaty changes to be agreed by all 27 EU member states, including the UK, or whether it can be done by agreement of the eurozone nations alone.

Addressing the Berlin parliament, Mrs Merkel said: “The German government has made it clear that the European crisis will not be solved in one fell swoop. It’s a process, and this process will take years.”

Germany wants the Stability and Growth Pact, which was intended to impose fiscal discipline on eurozone states but has been breached dozens of times, to be replaced with closer supervision of national budgets and more effective rules to keep debt under control.

Berlin is pushing for new powers to send countries to the European Court of Justice if they violate the pact’s requirement to keep deficits below 3% of GDP and government debt under 60% of GDP.

“We need to do away with the underlying deficiencies in the fiscal and currency union,” said Mrs Merkel.

“In order to win back trust, we need to do more. Where we today have agreements, we need in the future to have legally binding regulations.”

Downing Street made clear this morning that the UK is prepared to see the demise of the Pact, adopted in 1997 as part of the Maastricht Treaty process which paved the way to the single currency.

But it was unclear whether Mr Cameron will demand the return of any powers from Brussels in return for UK approval of any treaty change which might be required.

The Prime Minister’s official spokesman told reporters: “We accept the fact that the eurozone needs to look again at the rules that it has for dealing with fiscal policy.

“We accept that the Stability and Growth Pact hasn’t worked and has to be replaced with something else, so it is right that the eurozone are discussing this issue.

“The issue for us is to ensure we have appropriate protections in place to ensure that the single market is maintained and we don’t do anything to jeopardise the single market.”

The spokesman stressed that Britain’s priority in the current negotiations was a successful eurozone.

Asked if Mr Cameron plans to use the process to win back powers from Brussels over issues like employment law, the spokesman said: “In any negotiation and discussion in the EU, we will seek to further our national interests.”

Mr Osborne declined to say whether a limited treaty change would require a referendum in the UK, saying: “Let’s see what comes out of the discussions in Europe, in the eurozone.”

The chair of the European Parliament’s Economic and Monetary Affairs Committee, Sharon Bowles, warned: “We are potentially facing the demise of the euro by Christmas and if that happens it will wreck our economy.”

The Liberal Democrat MEP for South-East England added: “If the euro breaks up, I think there will be rampant protectionism. Even if you get a smaller euro with just the AAA countries huddling together, they will still go down the track of protectionism.

“If the euro breaks up then countries, including the UK, should work to save the EU so that we continue to benefit from the single market and avoid a situation of every man for himself.

“We need something concrete and substantial next week from leaders. Promises and packing up for Christmas holidays will not do.”

UK Independence Party leader Nigel Farage described Mr Cameron’s visit to Paris as “part of a softening-up process by European leaders on Britain”.

Mr Farage said: “We know what Sarkozy and Merkel want - a solid fiscal debt and political union. To get this, they require a treaty change.

“Cameron, however, wants to help them but does not want a UK referendum on Europe. This meeting is about trying to square that circle.

“The crisis in Europe provides a once-in-a-lifetime opportunity for the British Prime Minister to act in British interests. He must know that he has the whole-hearted support of the country if he were to do so.

“That he refuses suggests that he prefers the polite applause of Paris, Berlin and Brussels to the wishes of the British people.”