Cameron sets out 'red lines on economic sovereignty

David Cameron today set out Britain's "red lines" on economic sovereignty at his first summit encounter with fellow EU leaders.

He said Britain would not submit its annual Budget for "peer review" to Brussels as part of a new economic surveillance crackdown.

And he warned that proposed hefty sanctions against countries breaching deficit and debt limits set by the EU must apply only to the single currency member states.

The new boy in the bloc was invited to speak early on in today's summit debate on EU "economic governance" and, after formally introducing himself, set out Britain's well-established defence against central control over the domestic budget programme.

Summit conclusions on the table seem to offer the Prime Minister a way out of the "peer review" plan, which would require all countries to submit annual national Budget details and analysis to Brussels before presenting them to MPs.

The text backed by most EU leaders proposes that, from 2011, in the interests of strengthening budgetary discipline across the EU, member states should present their budgetary plans to the Commission each Spring "taking account of national budgetary procedures".

Mr Cameron is relying on the last six words to get him off the hook - but debate is still raging on whether sanctions for excessive deficits and debts - including fines and possible temporary suspension of EU voting rights - should apply to the 16 eurozone members or all 27 countries.

The summit is discussing progress of a "task force" on economic rules and surveillance headed by EU Council President Herman Van Rompuy.

No final decisions are due until a summit in October on a new EU economic rule book to help restore European economic stability.

But Mr Cameron lost no time in setting out his stall - having made clear earlier that Europe would now see Britain "playing a positive, active, engaged role in the European Union."

After a pre-summit breakfast with European Commission President Jose Manuel Barroso the Prime Minister declared: "We have a strong and positive agenda taking action on finance.

"We will always defend our national interest as others do, and our national red lines but we know how important growth and confidence is in Europe."

Mr Cameron also emphasised the importance of a strong EU trade policy, insisting: "We very much agree on trade. We will be a good promoter of free trade...to get the engine of the world economy moving - those things, rather than processes and institutions."

Both Mr Cameron and Chancellor George Osborne made clear before the summit that the new coalition Government is fully behind post-economic crisis plans for better co-ordination of national efforts to get deficits and debt down and boost growth and jobs and aid recovery.

But where economic sovereignty is under threat, the co-operation stops.

On Mr Cameron's refusal to agree to EU "peer review" of the Budget, a Government official said: "The text (of the summit conclusions) is very clear that there should be respect for national budget procedures."

In the UK's case that means the Commons must have first sight of the Chancellor's annual Budget - with no exceptions.

Earlier, Mr Cameron had private get-to-know-you talks with his Dutch and Spanish counterparts.