Osborne : EU veto protects UK

Chancellor George Osborne says David Cameron's decision to veto changes to the European Union treaty has "helped protect Britain's economic interests".He said Britain's financial services and manufacturers had been protected from "eurozone integration spilling over" and affecting non-euro members.He said the government was not prepared to allow the "full force" of European institutions to undermine UK interests.Critics have warned the UK risks becoming isolated by the move.The prime minister blocked changes to the EU's Lisbon Treaty at an EU summit that ended in Brussels on Friday.It now looks likely that all 26 other members of the European Union will agree to a new "accord" setting out tougher budget rules.Labour said the UK would be left out of key European Union decisions affecting the country's future.But Mr Osborne told BBC Radio 4's Today programme that Mr Cameron made a tough decision that was "the right one for Britain"."We have protected Britain's financial services, and manufacturing companies that need to be able to trade their businesses, their products, into Europe. We've protected all these industries from the development of eurozone integration spilling over and affecting the non-euro members of the European Union."Mr Osborne said Mr Cameron's veto was not "some sort of secret negotiating position" and that he had done "exactly what he said he was going to do"."If we had signed this treaty - if David Cameron had broken his word to parliament and the public, gone there and caved in without getting the safeguards he was looking for - then we would have found the full force of the European treaties, the European court, the European Commission, all these institutions enforcing those treaties, using that opportunity to undermine Britain's interests, undermine the single market."We were not prepared to let that happen."Mr Cameron is facing intense scrutiny over his veto, with some Lib Dem critics saying he is appeasing the Tory right.However, Lib Dem deputy leader Simon Hughes denied any rift between his party and the Conservatives, telling the BBC News Channel that the coalition had agreed on the negotiating position.He said he "regretted" that an agreement had not been reached that would allow all 27 EU countries "to be together on all issues", but he "accepted" Mr Cameron's judgement that the offer was not acceptable."It's always a matter of judgement as to whether we would be able to make a deal or not - and the PM formed the judgement that the offer was not acceptable."So, yes, I accept that, but I don't agree it puts us outside of the European Union. We're clearly absolutely there."Michael Fallon, deputy chairman of the Conservative Party, said Britain did not want its tax and spending decisions to be made in Brussels and it wanted to stay out of decisions on the euro currency.He said the UK would "still play a full part at all the major EU meetings that look at the internal market, and how the market works for business - that's important for British jobs".Former Deputy Prime Minister and Lord Heseltine earlier told the Today programme that the political situation meant it would have been impossible for Mr Cameron to have agreed to treaty changes."He didn't sign and he couldn't have signed because he hasn't got a parliamentary majority today to take us down that road," he said.But the Conservative peer, one of his party's most pro-European figures, said Mr Cameron's move had not safeguarded the City, which was his stated priority."They (the Europeans) could theoretically create rules for the eurozone which would make it difficult to trade outside it in financial service activities and that's the fear," Lord Heseltine said."In saying that he wanted to protect the interests of the City he was agreeing that there were interests to protect, and there's no way you can protect those interests by floating off into the Atlantic."Labour leader Ed Miliband said the UK would now be excluded from key economic decisions and UK Independence Party leader Nigel Farage said the outcome was "the worst of all worlds" for the UK, leaving the country in Europe but without power.Mr Cameron met about 30 Conservative backbenchers at his official country residence on Friday night.One Eurosceptic MP - Andrew Rosindell - said the mood had been "extremely positive".