Cameron's veto designed to protect UK government, not 'City'

The British Prime Minister insisted his veto protected London's financial services, but was it really just a ruse to prevent the break-up of his government and a general election? Our resident satirist Schadenfreude seems to think so

Maybe I got it all wrong. I surmised that when British Prime Minister David Cameron used the veto in December, he was primarily seeking to protect the City of London against new damaging regulation. The tactics did not work, as any fool knew they wouldn't. I am now coming round to the belief that the aim was to save the government.

If Cameron had agreed that the eurozone group should mastermind a new European Union Treaty, modifying the Lisbon Treaty, it would not have been too difficult to exempt the United Kingdom from the stabilisation controls - which the new agreement is expected to incorporate. It would have been persuasive to contend that the fiscal monitoring in the new treaty should apply only to the eurozone countries since they are vulnerable. Unlike the "outs", they cannot use the classical tool of devaluation as part of the package to rebalance their finances. More revenue and less spending is their only way forward. And if they default, the whole of the eurozone pays the penalty.

Britain does not need the shared straightjacket because it has the freedom and the central bank to see to its own tailoring. Although called a "pre-in", it has no intention of joining the single currency. The motto of the Maastricht Treaty, which set the ball rolling, was "no exclusion from joining, no compulsion to join". This motto could be the guiding light again. But any EU treaty - even one with derogations, opt-outs or whatever you call them, must be ratified by all members. A stabilisation treaty must be voted on at Westminster.

Presentation of a stabilisation treaty would have provoked unholy rows in the British parliament. Some would have seen creeping federalism, with the derogations under continuous criticism and no assurance that the UK would be able to stand apart indefinitely. Others would have demanded a higher price for agreement, in the form of the "repatriation" of EU powers especially - which the Conservative Party regularly talks about, but has not been able to realise. Others would have argued that the ripple effects of the eurozone crisis – and the threatened break up of the single currency – point inexorably to a referendum on the draft treaty or even better to a referendum on whether Britain should remain in the EU.

The coalition would be unable to withstand these pressures. The parliamentary majority could be lost. Labour would join the barrage of criticism of the government's handling of the affair. With votes and possibly a confidence motion lost, a general election would be in the air. Meanwhile, in the turmoil, the markets would be unsettled and economic situation would worsen. But it will not happen, thankfully for the coalition. The analysis suggested above could not be used publicly to justify the outcome reached. But was it the plan? Quite possibly, so I am prepared to eat a large slice of humble pie.