18/10/2012 20:54 BST | Updated 18/10/2012 20:56 BST

David Cameron Backs Eurozone Banking Union Plans, Hailing Single Market As 'Engine Of Growth'

Prime Minister David Cameron backed plans for a banking union for the eurozone - without compromising the EU single currency.

He told fellow EU leaders at a summit in Brussels that Britain supported the proposals, including sweeping supervision not just for the biggest banks but smaller institutions too.

He later set out the need not just for a single supervisor to govern the eurozone, but for a comprehensive system of resolution funds - to cover the wind-up of failing banks - and deposit guarantees to restore stability and credibility.


Cameron insisted the single market was the most important thing for European growth

None of the measures would affect non-eurozone countries, but Mr Cameron was seeking assurances that further eurozone integration would not be at the expense of the single market.

Arriving at the summit the Prime Minister said: "We're in a global race. We need to make sure that we're competitive, we need to make sure the European Union is competitive.

"And that means deregulation, cutting the costs of regulation, supporting enterprise, it means doing trade deals with the biggest economies in the world, the United States of America, Japan, the fastest growing countries in the world.

"And above all it means completing the thing that matters most for us in Europe, which is the single market. That could be an engine of growth and there's more work to be done."

British pressure to keep up the pace in the face of the continuing economic crisis in Europe came as French President François Hollande effectively told Britain not to try to dictate to the eurozone.

In an interview published in a group of papers across Europe, Mr Hollande said: "Certain countries don't want to join (the eurozone): that's their choice. But why should they come telling us how the eurozone should be run?"

Mr Cameron's case is that measures being taken inside the eurozone must be closely studied to ensure they don't impinge on the rest.

He was even hinting at British support for a separate budget for the 17 eurozone countries in future - although the idea is far off and for the moment Mr Cameron says he can't see how it could be introduced without implications for the wider EU budget.

Before the summit Mr Cameron held talks with his anti-federalist European political bedfellows, including the leaders of the Poland's Law and Justice and Poland Comes First parties and the Civic Democratic Party of the Czech Republic.

The parties formed a new political bloc in the European Parliament after Mr Cameron took his MEPs out of the mainstream centre-right grouping, the European People's Party, in 2009.

The move was branded at the time by the then Labour foreign secretary David Miliband as a British Tory partnership with "unsavoury allies".

After lunch Mr Cameron and other ECR leaders put their names to a statement on the eurozone crisis declaring:

"The euro area crisis has prolonged the financial and economic crisis for the whole EU.

"It is therefore essential that all members of the EU and particularly members of the euro area pursue economic reform and re-establish sound public finances as the basis for long-term recovery and a return to prosperity.

"We believe that whilst a certain degree of further integration of the euro area may be necessary to ensure the single currency is able to secure the confidence of the markets and return to stability, the rights of non-members of the euro area who wish to remain outside the scope of such measures should be fully respected, in particular in the single market."

While Mr Cameron was cheerleading for the single currency in Brussels, an EU Commissioner was doing the same thing in London.

Laszlo Andor, Commissioner for employment and social affairs, told a Lancaster House gathering on "Twenty Years On - The UK And The Future Of The Single Market", that completing the single market was "the key to prosperity for all".

He said more had to be done in particular to complete the EU single market for labour, which "will only perform well, be dynamic and work smoothly if employment policy enhances productivity and job quality, if the workforce has the right skills, and if people are mobile enough to respond to job vacancies in other member states and regions".

Mr Andor said that, by complying with European social legislation, EU-based companies were guaranteed access to "the world's richest and largest market".

At a time of national budget cutbacks across Europe, Mr Andor called for the European Social Fund to fill the gap.

He said: "Ensuring that the Social Fund has enough money continue providing support across the Union is vital for the overall economic and social development of the EU's human capital and thus the single market."