British to take part in talks on euro zone arrangements

British officials are to take part in "technical discussions" on new arrangements to govern the eurozone economies, despite David Cameron blocking a new EU treaty at last week's Brussels summit.
The move - agreed on Thursday night in a telephone call between Mr Cameron and the President of the European Council, Herman von Rompuy - is likely to be seen as an olive branch both to the other EU countries and his Liberal Democrat coalition partners.
"The Prime Minister reiterated that he wants the new fiscal agreement to succeed, and to find the right way forward that ensures the EU institutions fulfil their role as guardian of the EU treaty on issues such as the single market," a No 10 spokesman said.
"That's why we have today agreed to participate in technical discussions to take forward this work."
On Thursday night, the head of the International Monetary Fund Christine Lagarde warned Europe's debt crisis would not be solved by Europe alone and called on all countries to work together to avoid a 1930s-style depression.
"It's not a crisis that will be resolved by one group of countries taking action," she said in Washington. "It's going to be hopefully resolved by all countries, all regions, all categories of countries actually taking action."
Earlier, Mr Cameron's spokesman rejected reports that the Prime Minister was agitating against the "fiscal compact" agreed by the other 26 member states last Friday.


In recent days, Mr Cameron has spoken to his counterparts in non-euro states Denmark, Sweden and the Czech Republic, all of whom are said to have concerns about the compact, as well as with Taoiseach Enda Kenny, who has warned he may have to put it to a referendum.


“He has been speaking to a number of different European leaders in recent days and will continue to do so in the coming days, with the objective in mind of making clear that we want to engage constructively,” said the spokesman.


Nevertheless, cracks appeared to be emerging in the group of 26 when Hungary and the Czech Republic said they would not join the new agreement unless plans for tax harmonisation were dropped.


Neither country uses the euro and both said in Brussels last week that they would consult their parliaments before deciding whether to sign up.


Following talks in Budapest, Hungary’s prime minister Viktor Orban and his Czech counterpart Petr Necas said they wanted to take active roles in negotiations over the new agreement but required further details of how it would affect non-euro zone nations.


Tensions between London and Paris were further heightened yesterday after the head of France’s central bank suggested that the UK was a candidate for a credit rating downgrade.


France is bracing itself for the potential loss of its coveted AAA rating after two credit agencies last week indicated they were considering marking down countries across the euro zone.


But Banque de France governor Christian Noyer said they should instead be looking at the UK because of the scale of debt and inflation and the poor levels of growth and bank lending on this side of the Channel.