By Matthew Barrett
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Osborne NewXAppearing on the Today programme this morning, George Osborne said there is "no way" Britain will be part of any proposed EU banking union, and will require "certain safeguards" if one came into force. He outlined what such a banking union might look like:

"[W]hat I’ve called the remorseless logic of a single currency, is that you have something more akin to a banking union or a financial union, so that for example, Spanish depositors have confidence that they can leave their money in Spanish banks. So that for example, there are common funds to recapitalise banks, so for example, as you say, in return for that, there is tougher pan-eurozone supervision."

He then issued his warning that Britain would not be part of it:

"Now those are all obviously quite significant steps, but let me be absolutely clear: there is no way that Britain is going to be part of that banking union. We are not part of the eurozone; we chose not to join the euro, precisely because of the loss of national sovereignty that would be involved, the loss of flexibility to manage our banks in the way we wanted to, to manage our public finances in the way we wanted to. So we will not be part of a banking union. … I think Britain will require, if there is a full-blown banking union, certain safeguards"

Osborne hinted at the fact that a "reshaped relationship with Europe" would require a referendum for Britain:

"I think what the public are concerned about, the British people would be concerned about, would be if there was any transfer of power. A reshaped relationship with Europe would imply, would involve, a transfer of sovereignty or powers to Brussels. I think we have a very clear safeguard in the system now, thanks to this Government, which is, if there is any transfer of power from this country, transfer of competence or transfer of sovereignty from this country to the European Union then there will be a referendum."

This last extract is another indication of the Coalition moving towards a European referendum. This will please many in the Party, and it will also give Ministers a good platform from which to demand safeguards or repatriations of power from Europe at the next negotiation stage – when a "reshaped relationship" could come about.

Osborne also heralded the "referendum lock" passed by the Coalition early on in this Parliament as "one of the most significant things we’ve done":

"[T]his Coalition Government, led by David Cameron, has passed into law a referendum lock that says if any government minister of any political party proposes a transfer of powers or sovereignty from the United Kingdom to the European Union, then there will have to be a referendum. That is absolutely a crucial safeguard that now exists. When this law was passed, very early on in the Coalition Government’s life, people I don’t think paid very much attention to it. I can tell you, it’s probably one of the most significant things we’ve done over the last two years."

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