Euro-rows - they're not over

Just when you thought it was safe to go back into the water….

Another euro-row looms in the Commons. Last week's rebellion was the result of a "European Document" being referred for debate by the full Commons by Bill Cash's European Scrutiny Select Committee; this week another European Document has been similarly referred. This time it's on moves towards banking union for the eurozone, and the issues involved are huge, and could well induce another uprising.

The eurozone countries are groping towards a banking union, as part of their attempts to sort out the problems of the single currency. They need to be able to underwrite each other's debt and share risk if the euro is to survive - but the worry for Britain is that there will be regulatory overspill into the City of London. Given that financial services employ a million people in Britain and contribute ten per cent of the national tax take, the impact on the UK economy could be huge. Remember, there are branches of European banks in the City and branches of British banks in Europe, and that there are some calls for a requirement that clearing houses which do more than 5 per cent of their business in Euros should be located in the Euro-zone. So there are several routes through which the directive could cause havoc in the City. And in particular a financial transactions tax in Europe would have a massive effect on London, potentially causing an exodus to some lower-tax jurisdiction.

All this is high powered stuff. The government motion notes with approval its decision to "stay outside the new supervisory arrangements, while protecting the single market in financial services." But the European Scrutiny Committee has been sending strong signals that it expects proper examination of the issues before David Cameron signs any agreement. And an amendment in the name of Bill Cash calls for the government to block changes in the voting system for European Banking Authority to maintain the UK's ability to block any such changes. This may not result in a revolt on the scale of last week, if only because those minded to rebel don't want to upset apple carts on too regular a basis.

Even if there is no orchestrated attempt to defeat the government - and I get no vibrations suggesting any repeat performance - the City Minister, Greg Clark (who led for the government in last week's defeat) can expect a couple of hours on the rack.

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