Paris-Berlin pact rules out Cameron’s reforms

Ireland’s need to keep Britain in the EU took a backward step with a joint Franco German pact on the future of the eurozone.

The Irish economy is predicted to be the biggest loser — even more so than the UK according to some analysis — in the event of the latter leaving the European Union.

The joint paper from Paris and Berlin could also have major implications for the Irish economy as it names tax as one of the areas where there could be greater convergence in the years ahead.

UK prime minister David Cameron is expected to announce, after the Queen’s speech in Westminster today, that he will hold a referendum for an ‘in or out vote’ by the end of 2017.

The paper agreed by French president François Hollande and German chancellor Angela Merkel rules out any treaty change at least until the end of 2016, virtually wiping out any hope of Mr Cameron securing major EU reforms that would require treaty change.

The document will form a key part of a report to be considered by EU heads, including Taoiseach Enda Kenny, next month which is aimed at creating closer political ties between the eurozone countries.

Mr Cameron says he does not want the eurozone to develop deeper ties because he fears that it will leave Britain as a second-class country in the union. They would prefer the emphasis to be on a common market rather than political issues.

He will present his demands to the June 25 summit and ask for support to achieve his aims, but the latest development between France and Germany, which are essentially the motor of the EU, is likely to dash his hopes.

Mr Cameron has begun a charm offensive to win support for his demands, dining with Commission president Jean-Claude Juncker at Checkers over the weekend.

He was scheduled to meet the Danish prime minister, Helle Thorning-Schmidt, tomorrow but it is unclear whether this will come about now as a general election is due to be called in the non-euro country before the end of the week.

He also goes to the Netherlands and Paris tomorrow followed by Poland and finally to Berlin on Friday.

All countries were asked to contribute to the report for the June summit on the future of the eurozone.

The Franco-German paper calls for four areas of action to be developed without the need for treaty change dealing with economic and fiscal convergence, tax and social stability, investment and the governance of the eurozone.

While the aims are much less ambitious than in previous years at the height of the crisis, they do not envisage the return of powers to member states, as demanded by Mr Cameron, and without which he has threatened to campaign for a no vote in the referendum.

Ireland’s contribution largely reflects the Franco-German paper in calling for the changes made to date giving the EU oversight of national budgets and spending to be bedded down, rather than expanded.

Irish and commonwealth citizens living in Britain will be eligible to vote but not other resident EU citizens who can vote in European Parliament elections.

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