German chancellor says she does not agree with all British demands but vows to be supportive, as George Osborne gives speech outlining potential deal

Angela Merkel has backed Britain’s calls for change within the European Union, telling business leaders in Berlin that Germany and the UK have similar concerns and that Europe needs to improve its competitiveness.

The German chancellor said that while her government would not agree with all of Britain’s demands, Germany would be supportive of Britain’s insistence for change.

“I agree that Britain should stay in the European Union, but of course the decision is not up to us, it will be up to the British,” she told the BDI conference of business and industry leaders. She was speaking before George Osborne addressed the conference to outline the UK’s agenda for change within the EU.



“Where there are justified concerns – whether competitiveness or a better functioning of the EU – British concerns are our concerns,” she said.

“The Europe of today is no longer a one-speed Europe,” she added.

She struck a conciliatory tone, in a speech that was otherwise dominated by the refugee crisis, and offered a more detailed response than any she has given until now on Britain’s demands ahead of a referendum on whether it should stay in the EU.



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The issue is viewed with great concern in Berlin and follows repeated statements by German politicians in favour of Britain remaining a member.

Treasury sources claimed that Merkel’s comments were significant because they went further than before about her desire to stop the UK leaving the EU.

Her remarks came before Osborne’s speech that laid out a deal to Merkel, in which he said Germany would get a better functioning eurozone, with Britain getting guarantees written into law that ensure its legitimate interests as a non-eurozone country are respected.

He insisted Britain was not seeking a veto over the eurozone decisions, or a new opt-out from the single currency. Osborne told the conference: “We get a guarantee that the eurozone’s decisions and costs are not imposed on us. You get a stronger euro. We make sure the voice of the pound is heard when it should be.”

He reiterated that Britain did not want to be part of an ever closer union, but did want the treaty to recognise it was an economic area of many currencies.

He said: “What we seek are principles embedded in EU law and binding on EU institutions that safeguard the operation of the union for all 28 member states. We must never let taxpayers in countries that are not in the euro bear the cost for supporting countries in the eurozone.”

In his key demand, Osborne said a principle had to be accepted that “when there are issues that affect all member states, they should be raised, discussed, and decided by all member states”.

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He added: “We seek to make these principles permanent and legally binding – and we want to design a simple mechanism to ensure the principles are enforced. These kinds of checks and guarantees exist in other parts of the EU’s governing rules.”

His remarks, designed to protect London’s financial interests, leave unresolved the issue of how to determine if a decision by the eurozone affected those outside it and, if it was agreed it had that broad an impact, how the issue would then be resolved at EU level.

Nevertheless his remarks are the most detailed yet on how Britain will try to protect UK interests inside the EU single market and yet let euro area countries go ahead with greater integration of economic governance.

In a sometimes candid speech, he gave the example of a European commission attempt in July to force the UK to shoulder some of the cost of the Greek bailout as a case study of how future relations cannot be handled.

He said: “In July, out of the blue, in flagrant breach of the agreement we’d all signed up to, and without even the courtesy of a telephone call, we were informed we could have to pay to bail out Greece. That would have been grossly unfair.”

But he said: “We shouldn’t have to fight a running battle on these issues” – but instead operate on a a set of clear written rules with agreed principles, he added.

“We need to recognise that just as financial stability and supervision have, rightly, become a key area of competence for eurozone institutions like the European Central Bank – so financial stability and supervision is a key area of competence for national institutions like the Bank of England for countries not in the euro.”

He insisted a deal was there to be done since the EU needed British acquiescence to treaty changes to bring about closer Euro governance, and Britain needed EU support to give the UK and other countries outside the safeguards they need.

He said: “Rather than stand in your way, or veto the treaty amendments required, we in Britain can support you in the eurozone to make the lasting changes that you need to see to strengthen the euro. In return, you can help us make the changes we need to safeguard the interests of those economies who are not in the eurozone.”