13/12/2012 16:25 GMT | Updated 13/12/2012 16:47 GMT

European Union's Banking Regulator Deal Praised By Cameron As Protective Of Britain's Interests

A new EU deal for Britain will be forged on the back of sweeping changes to shore up the struggling eurozone, David Cameron said on Thursday evening.

He made clear at a summit in Brussels that banking union and deeper integration between the 17 eurozone member states was the springboard for negotiating what he calls a new "settlement" for the UK in Europe.

cameron eu deal

British Prime Minister David Cameron, left, laughs as he speaks with from right, Finland's Prime Minister Jyrki Tapani Katainen, Croatian Prime Minister Zoran Milanovic, German Chancellor Angela Merkel and Estonia's Prime Minister Andrus Ansip during a round table meeting at an EU summit in Brussels on Thursday

An overnight accord between EU finance ministers paved the way for the summit to endorse a single eurozone banking supervisor - the backbone of a full banking union to buttress the battered single currency against future economic shocks.

EU leaders are now trying to reinforce the outline deal on supervision with a more detailed eurozone recovery "roadmap" which includes new measures on bank "resolution" - how to handle failing banks - and on minimum standards for deposit guarantee schemes.

The 15-page report presented at the Brussels summit on Thursday evening also looks at even greater eurozone fiscal integration in future, including co-ordination of national budget decisions and economic policies.

Mr Cameron praised Chancellor George Osborne's role in reaching a banking union deal - after winning safeguards for British banking sovereignty.

The Prime Minister said: "I think the Chancellor has done an excellent job because the European Union, the eurozone, needs a banking union but Britain won't be part of this banking union and we have properly protected our interests in the single market."

But he said the UK's new place in the EU was not currently on the agenda, adding: "These are broader discussions really about how Europe is changing and a lot of that change is being driven because of the euro and because the countries in the euro need to integrate more, need to integrate their institutions more.

"Britain's not in the euro, we're not going to join the euro so we won't be part of that integration. But this change taking place does give us the opportunities to argue for the things that we want in Europe and get a better deal for Britain in Europe."

Mr Cameron added: "That's what I'm interested in discussing and pursuing for Britain.

"That won't be decided today but it's a start of some important conversations where I think Britain can actually do better."

Meanwhile, European Commission President Jose Manuel Barroso urged eurozone countries to keep up the momentum for completing a "genuine" Economic and Monetary Union.

He said: "The agreement on a single supervisory mechanism, is the first building block of the banking union, and indeed it is the flagship of our proposal.

"I hope that now, building on this momentum, EU leaders will keep the ambition: let's not lose the momentum.

"The fact that the situation in the financial markets is now better than before should not be seen by the governments as a way to procrastinate. I hope they keep the same sense of urgency."

Mr Barroso said Brussels was not seeking approval of the full Economic and Monetary Union "blueprint" now, adding: "We are entering into more delicate issues, in terms of pooling of sovereignty in some areas, in terms of fiscal matters. But I think it is possible to achieve progress."

Open Europe hailed the banking union deal as establishing an important principle - "that the eurozone can't write the rules for the rest of the EU and undermine the single market".

A statement said: "While it represents a major step towards more integration in several ways, politically, this deal is significant in two key regards: first, for better or worse, it gives Germany political cover to put more cash on the line, moving the Eurozone closer to European Stability Mechanism-led recapitalisation of banks in the likes of Spain.

"Secondly, it establishes a very important precedent in how to reconcile further eurozone integration - which the UK and others will not take part in - with the single market, which is the property of all 27 member states.

"For the first time, the EU has acknowledged the need for two-tier - and tailored - voting rights, depending on the individual countries' status either inside or outside the euro. It illustrates that the UK and other eurozone 'outs' aren't faced with an 'all or nothing' choice: there is a road between joining the euro and isolation."