Cameron and Merkel pledge unity

 
David Cameron and Angela Merkel have acknowledged their differences over the way forward in the euro crisis, but insisted that Britain and Germany will work together in a spirit of "strong friendship".

Speaking after talks in German capital Berlin, the two leaders stressed areas of agreement over measures to improve competitiveness in Europe economies, hold down the EU budget and encourage member states to deal with their debts and deficits.

But they left no doubt that they have not papered the cracks over Germany's demand for treaty change to prevent a repeat of the sovereign debt crisis in the eurozone and European Commission calls for a Financial Transaction Tax, which Britain opposes.

Mr Cameron said: "It is obvious that we don't agree on every aspect of European policy, but I am clear that we can address and accommodate and deal with those differences."

Neither Mr Cameron nor the German chancellor directly addressed the prickly issue of whether the European Central Bank (ECB) should act as a lender of last resort by printing more money to assist single currency members in economic difficulties.

But the Prime Minister left no doubt that he remains convinced the ECB should get involved, despite German concerns that this would risk triggering inflation.

Mr Cameron said: "All the institutions of the eurozone have to stand behind and back and do what is necessary to defend it.

"It's obviously a difficult time, we can see that in the markets, but I don't underestimate for a minute the commitment of countries like Germany and those in the eurozone to make their currency work. That is what is in Britain's interests and that is what we would like to see happen."

Mrs Merkel said that Germany wants a "limited treaty change" - which she suggested would not involve countries, like Britain, which have not adopted the single currency - to ensure that eurozone members stick to their commitments under the Stability and Growth Pact in future.

Germany is hoping that the upcoming summit of the European Council on December 9 will agree measures to amend EU treaties. Mr Cameron is wary of any treaty change because he knows it will ignite backbench Conservative demands for a referendum on Britain's relationship with the EU.

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