‘UK’s EU veto threat economic insanity’

Britain’s former European commissioner Peter Mandelson says British Prime Minister’s threat to block eurozone efforts toward a more integrated union is “economic insanity”.

Cameron said on BBC’s Andres Marr Show on Sunday that London is “perfectly entitled” to ask for repatriation of powers from the EU but being entirely outside the bloc is not “right for Britain”.

“As they [the countries of the euro] need to change, what that means is they are changing the nature of the organization to which we belong. And thus we are perfectly entitled – and not just entitled but actually enabled, because they need changes – to ask for some changes ourselves,” he said.

This comes as Lord Mandelson wrote in an article for The Guardian that Cameron will jeopardize Britain especially because his argument has little chance of success in the EU as it fails to serve the interests of the union.

“[Cameron] will be disappointed if he thinks he can put a gun to their heads to begin renegotiating Britain’s EU membership and then dictate when it will end, especially when, in their view, he is arguing not in Europe’s interests as a whole but for British exceptionalism,” Mandelson said.

He also warned that the situation will be hugely damaging to Britain as the EU will choose to protect euro rather than heed London’s demands, which undermine the single currency.

“It is an act of economic insanity to begin 2013 by placing this large and indefinite question mark over our membership of the EU, and all the trade and investment privileges it brings us,” Mandelson said.

“The signal it sends to the world is that we are on our way out of the European single market and that those who invest in Britain in order to trade in that market should think again,” he added.

Cameron also argued that keeping a single currency inevitably needs “a banking union and forms of a fiscal union” that go against the wishes of London, effectively making Britain “perfectly entitled, and not just entitled but actually enabled” to seek its change of relationship with the union.

While Britain can veto changes to the Lisbon Treaty, which created the EU, he is feared to strangle crisis-hit Britain in massive economic uncertainty due to changes to how it is tied to its biggest trade partner.

This comes as it is not clear whether treaty changes are required for greater EU fiscal integration, and even if such changes are needed governments can neutralize Cameron’s veto by hammering an agreement outside EU institutions.

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