18 November 2011 Last updated at 15:17 ET

Eurozone crisis: Cameron and Merkel stress unity

 

Merkel and Cameron have very different views about a European financial transactions tax

David Cameron and Angela Merkel have acknowledged differences over the eurozone crisis but stressed they have the "same plan" for European growth.

The prime minister met the German chancellor in Berlin to discuss the eurozone crisis, and Iran and Syria.

Mrs Merkel said they did "not make progress" on plans for a European financial transactions tax.

But Mr Cameron, who argues any such tax must be global, said they were "good friends" who wanted Europe to succeed.

'Good relationship'

The meeting came amid continuing tensions between the two countries over various issues.

At a joint press conference, both leaders stressed their "good relationship" and went through areas of agreement - including the need for European countries to tackle their debts and deficits, the importance of the single market, keeping EU spending in line with inflation and the need for action to resolve the eurozone debt crisis.

Mrs Merkel acknowledged that no progress was made on German and French calls for a European financial transaction tax.

Mr Cameron said a global tax would be "a good thing", but is concerned that a tax which does not involve other major global financial centres would penalise the City of London.

"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 these differences," he said.

"It's a good relationship. We have strong agreement on key issues about action the European economy needs to take."

Treaty change

He said that as economic growth stalled, it was "essential" that the UK and Germany should work together, and the German view that eurozone countries must show a commitment to fiscal discipline was "absolutely right".

Other areas of disagreement include whether the European Central Bank should be allowed to bail out struggling countries - something Mrs Merkel is resisting.

Neither leader addressed the issue directly at the press conference, but Mr Cameron said: "All the institutions of the eurozone have to stand behind and back and do what is necessary to defend it."

The BBC's economics editor Stephanie Flanders said that it was possible the eurozone rescue fund - the European Financial Stability Facility - could be given a bank licence so that it could borrow from the ECB, but then governments themselves would be taking on most of the risk.

"We may be long past the time when even the second, or third, best solution to the crisis was possible," she said.

Mrs Merkel's CDU party wants the EU's Lisbon Treaty to be amended to sanction a move towards closer fiscal union within the eurozone and says negotiations should begin at once.

A treaty change could prompt calls from Mr Cameron's Conservative MPs for a UK referendum - a "referendum lock" was introduced in the UK's European Union Act 2011, aimed at preventing major transfers of power from London to Brussels.

'Boost competitiveness'

At the press conference, Mrs Merkel called for "limited treaty change, only for members of the eurozone", while Mr Cameron said they had had a "discussion" on the issue adding: "Germany has her interests and so does Britain."

Mrs Merkel said: "The UK has made it clear to us that they have a few difficulties here and there with certain legal provisions of the EU and also have their own ideas on how to boost competitiveness.

"We both have interests, but we also have strong bonds of friendship and these strong bonds of friendship bring us to say we will work together closely in the period leading up to December 9 [the European Council summit] because we absolutely understand each other's viewpoints."

Labour leader Ed Miliband told the BBC: "What David Cameron has been spending most of the time doing is trying to point the finger of blame at Europe for Britain's problems - whereas actually Britain's problems began well before the eurozone crisis.

"What he needs to do instead of pointing the finger of blame is to take action himself to get growth moving and get young people back to work."

'Make mind up'

Nigel Farage, leader of the UK Independence Party which campaigns for Britain's exit from the EU, said Mr Cameron should "make his mind up" about how to deal with the eurozone crisis.

"On the one hand he's saying: 'You must push on to full fiscal and political union,' but on the other, he's saying he'd quite like to have some powers back from Brussels."

But Lib Dem leader and Deputy PM Nick Clegg said the UK's relationship with Germany was "immensely important".

"Clearly Europe is going to evolve and change as the eurozone stabilises, as I hope it will, as the new institutional arrangements are put in place in the eurozone.

"It's quite right for us in Britain to say: 'That's a perfectly good thing but we want to look out for Britain's interests whilst making sure there isn't a new division within Europe.'"

Mr Cameron met European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso in Brussels on Friday before flying to Berlin.