BERLIN (Reuters) - Angela Merkel and David Cameron will try to resolve clashing views on the euro zone crisis Friday, after Berlin accused London of being selfish about Europe in comments that touched off British sensitivities about German bossiness.
The British government wanted a low profile for the eurosceptic Cameron’s visit - but such hopes were dashed by two lawmakers high up in Merkel’s ruling party blasting euro zone-outsider Britain’s stance in the days before the visit.
Merkel told her Christian Democratic Union’s (CDU) annual congress in Leipzig this week that Europe faced its “toughest hour since World War II.”
She prescribes altering the European Union treaty to impose German-style budget discipline, preferably on all 27 members of the EU rather than just the 17 countries in the euro zone.
“Plans for a possible treaty change are now at a very interesting point and we expect to exchange views with our British partners,” Peter Altmaier, chief whip of Merkel’s conservatives in the Bundestag, told Reuters.
But treaty change talk seems to irritate Cameron’s conservative-led coalition for two reasons: it falls far short of the “big bazooka” response he urges; and it touches a raw nerve about ceding more sovereignty to the European Commission in Brussels.
Britain is already that worried Germany’s proposals for a tax on financial transactions - which it still wants introduced in Europe despite rejection by the Group of 20 leading economies - would hurt London’s competitiveness as a financial hub.
This prompted Merkel’s parliamentary leader Volker Kauder to tell the CDU in Leipzig, to rapturous applause, that Germany would not accept Britain “only defending its own interests” and especially those of the City of London’s financiers.
His metaphorical comment that the German approach to the crisis was so widely accepted that “German is being spoken in Europe” prompted jingoistic British headlines such as the Daily Mail’s: “We no longer need to fear the jackboot but we have a great deal to fear from German bossy boots.”
“Germany is making the running ... in a way she has not presumed to do since World War II,” said the conservative Mail.
The British government’s response was more muted.
Business Secretary Vincent Cable, from Cameron’s more pro-Europe Liberal Democrat coalition partners, said Germany’s stance on the transaction tax was “completely unjustified.”
Cameron said in a speech this week, in an apparent response to Merkel’s calls for greater political and fiscal convergence, that Europe needed “the flexibility of a network, not the rigidity of a bloc.”
Britain’s conservative leader is in a quandary on the euro, realizing his country’s exports could be harmed by a collapse most likely to be avoided by more unity among euro zone leaders - however much that goes against the grain in London.
Crucially, London fears being left out of crucial decisions regarding the European single market, which it greatly values.
With the Bank of England warning that Britain’s economy will struggle to grow until mid-2012 - in contrast to Germany’s - it is tempting for London to deflect blame onto the euro zone.
Cameron’s “big bazooka” response would involve the European Central Bank becoming the lender of last resort to prop up debt-ridden countries such as Greece and Italy - much in line with U.S. President Barack Obama’s call for drastic action.
Such an infringement of the ECB’s independence and its focus on price stability is completely taboo for Merkel. But she replies more calmly than Sarkozy, who told Cameron in October: “We are sick of you criticizing us.”
German officials say Merkel is disappointed with her fellow conservative leader for not using his influence to aid the euro, and for threatening to use any EU treaty change to claw back powers from Europe rather than cede more.
“Achieving treaty change is visibly not too easy for this British government,” said Altmaier.
Berlin recognizes Cameron’s troubles with backbenchers who voted in large numbers last month in favor of a referendum on EU membership, and the Germans recall his campaign vow that any transfer of sovereignty would be put to a referendum.
“Nobody believes such a referendum in the UK would get a majority,” said the German chief whip.
Additional reporting by Matt Falloon in London