Merkel says eurozone not ‘closed shop’ to UK

Angela Merkel, the German chancellor, said the core eurozone countries should not be a “closed shop” to countries like the UK.

In comments at the World Economic Forum in Switzerland on Thursday, which followed David Cameron’s announcement of a referendum on British membership of the European Union, Ms Merkel said the eurozone countries’ rules should be “binding” for themselves but “freely accessible” to other EU members such as the UK.

Ms Merkel refrained from criticising the UK prime minister’s decision to offer the British public a vote on EU membership and, in one of several unprompted positive mentions of the UK, said Germany and her “friend” Mr Cameron would work together to fight tax evasion.

The chancellor’s wide-ranging remarks to executives and policymakers proposed another attempt at an EU-US free-trade agreement, which she acknowledged had previously foundered on disagreements over agricultural exports.

Ms Merkel reiterated that growth and fiscal consolidation were “two sides of the same coin” and said other European countries needed to match Germany’s industrial competitiveness as she would not risk German exports by settling for the “lowest common denominator”.

Earlier on Thursday Mr Cameron defended his decision to put Britain’s EU membership to a vote if the Conservative party won the 2015 general election.

“Let’s negotiate a new settlement for Europe that works for the UK and then let’s get fresh consent for it,” he said. “It’s not just right for the UK. It’s necessary for Europe.”

The prime minister sought to persuade other EU countries that in seeking to renegotiate its relationship with the EU, Britain was doing nothing different from eurozone countries that are seeking closer integration.

“The club we belong to is changing. We can’t ignore this. Change is under way,” Mr Cameron said.

The prime minister received a lukewarm reception from a packed main conference hall, and other European leaders see Britain’s move as a distraction to the more important issue of ensuring eurozone survival. But Mr Cameron insisted that there needed to be a reconsideration of Britain’s position.

He did not spell out his demands for a looser relationship, but indicated that the EU should see Britain’s actions as part of a wider ambition to improve economic performance across Europe and make the bloc more outwardly focused.

“Europe is being out-competed and out-invested – and it’s time we make it an engine for growth, not a source of cost for business and complaint for our citizens,” he said.

Mr Cameron received a boost when some British business leaders, including the chief executive of the London Stock Exchange and the chairman of Standard Chartered, backed his plan for a referendum.

In a letter to The Times, 56 industry and City leaders said they agreed with the prime minister that Britain’s “best chance of success is as part of a reformed Europe”.

Most of Mr Cameron’s speech was devoted to Britain’s chairmanship of the G8 this year, in which the UK wants the world’s large advanced countries to agree new rules to clamp down on international tax avoidance and evasion.

While seeking to maintain his pro-business stance, he said: “I am a low-tax Conservative. I am not a companies-pay-no-tax Conservative.”

“Clamp down in one country and the travelling caravan of lawyers, accountants and financial gurus just moves on elsewhere. So we need to act together at the G8,” Mr Cameron said, adding: “If there are difficult questions about whether existing standards are tough enough to tackle avoidance, we need to ask them. If there are options for more multilateral deals on automatic information exchange to catch tax evaders, we need to explore them.”

The G8 has largely been superseded on the global stage by the G20, but on issues that predominantly affect rich countries, agreement in the G8 would set a wider trend.

Additional reporting by Hannah Kuchler in London