UK Daily Mail

By Daily Mail Reporter

Sir John Major – who as prime minister signed up to the Maastricht Treaty – has joined calls for a renegotiation of Britain’s relationship with Brussels.

His intervention piles further pressure on David Cameron to use the crisis in the eurozone to demand powers back from the European Union.

The former premier caused surprise in Tory circles by saying yesterday that now is the time to insist on ‘looser’ ties with the EU.

At the Conservative conference last week, Mr Cameron said he wanted to claw back powers from Brussels, but suggested it would have to wait for negotiations over a new treaty, which might be several years away.

The Prime Minister signalled to around 120 Conservative MPs in a new Eurosceptic grouping that the debt crisis engulfing the eurozone and threatening the British economy must take priority.

Sir John, however, said there could be a ‘much more speedy’ opportunity to renegotiate, particularly on issues affecting employment law and regulation of the City.

He claimed it was likely that Europe was heading towards a ‘federal state within the eurozone’.

‘At some stage there will be another treaty because if there is fiscal union in Europe it changes our relationship to Europe,’ he told the BBC’s Andrew Marr programme. ‘It gives an opportunity for two things. Firstly it gives us an opportunity to negotiate for the looser form of Europe that I would have liked to have seen in the 1990s.

‘I think there are some areas that are worth looking at. Fishing is one. I think there are some elements of employment law... things like the working time directive, which I think is a very foolish piece of legislation.’

Crisis: A group has been formed by the new intake of Tories to put pressure on the leadership to weaken ties with Brussels, as John Major says Britain could actually take advantage of the eurozone nightmare

Sir John said regulation of financial services was another area where Mr Cameron should demand the return of powers, adding: ‘We really don’t want a whole series of restrictive notions damaging our financial structure.’

Sir John also said it was time to accept that Greece is unable to pay its debts and get a default ‘out of the way’. He said a debt default should be done within the eurozone and with assistance to prop up banks that hold the country’s bonds.

Opportunity: Sir John on BBC programme The Andrew Marr Show yesterday

‘In the short term, the banks need to be recapitalised and Greece needs to default. The sooner that happens and Greece defaults, the sooner you remove something from the overhang in the markets,’ he said.

‘If Greece defaulted and couldn’t pay its debts, all the Greek bonds that are held in other banking systems across Europe would suddenly have no value.

‘You could, as a knock-on effect, create a banking crisis in Western Europe. That would be absolutely catastrophic. So Greece must not default until the banks are in a position to absorb any losses.’

He suggested that the most likely option was turning the European bailout fund into a bank and allowing it to buy up bonds or recapitalise the banks.
Last night Mr Cameron called for ‘safeguards’ to protect non-euro members such as Britain as the single currency area integrates further.

In an interview with the Financial Times, he suggested there was a French-inspired plot to discriminate against the City of London simply because it operates outside the eurozone. ‘I’m not having them trying to move our financial services industry to Frankfurt – forget it,’ he said.

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