MercoPress. South Atlantic News Agency

UK and Germany agree to disagree; no progress on the transactions tax

Cameron tells Merkel: a global tax but not limited to Europe

The leaders of Britain and Germany David Cameron and Angela Merkel acknowledged differences over the Euro zone crisis but stressed they have the “same plan” for European growth. The prime minister met the German chancellor on Friday in Berlin to discuss the Euro zone crisis, and Iran and Syria.

Mrs Merkel said they did “not make progress” on plans for a European financial transactions tax. But Mr Cameron, who argues any such tax must be global, said they were “good friends” who wanted Europe to succeed.

The meeting came amid continuing tensions between the two countries over various issues.

At a joint press conference, both leaders stressed their “good relationship” and went through areas of agreement - including the need for European countries to tackle their debts and deficits, the importance of the single market, keeping EU spending in line with inflation and the need for action to resolve the Euro zone debt crisis.

Mrs Merkel acknowledged that no progress was made on German and French calls for a European financial transaction tax.

Mr Cameron said a global tax would be “a good thing”, but is concerned that a tax which does not involve other major global financial centres would penalise the City of London.

“It is obvious that we don't agree on every aspect of European policy, but I am clear that we can address and accommodate and deal with these differences,” he said. “It's a good relationship. We have strong agreement on key issues about action the European economy needs to take.”

He said that as economic growth stalled, it was “essential” that the UK and Germany should work together, and the German view that Euro zone countries must show a commitment to fiscal discipline was “absolutely right”.

Other areas of disagreement include whether the European Central Bank should be allowed to bail out struggling countries - something Mrs Merkel is resisting.

Neither leader addressed the issue directly at the press conference, but Mr Cameron said: “All the institutions of the Euro zone have to stand behind and back and do what is necessary to defend it.”

Mrs Merkel's CDU party wants The EU Lisbon Treaty to be amended to sanction a move towards closer fiscal union within the Euro zone and says negotiations should begin at once.

A treaty change could prompt calls from Mr Cameron's Conservative MPs for a UK referendum - a “referendum lock” was introduced in the UK's European Union Act 2011, aimed at preventing major transfers of power from London to Brussels.

At the press conference, Mrs Merkel called for “limited treaty change, only for members of the Euro zone”, while Mr Cameron said they had had a “discussion” on the issue adding: “Germany has her interests and so does Britain.”

Mrs Merkel said: “The UK has made it clear to us that they have a few difficulties here and there with certain legal provisions of the EU and also have their own ideas on how to boost competitiveness.

”We both have interests, but we also have strong bonds of friendship and these strong bonds of friendship bring us to say we will work together closely in the period leading up to December 9 [the European Council summit] because we absolutely understand each other's viewpoints.”