PM backs eurozone banking union

Prime Minister David Cameron has urged swift moves towards a banking union for the eurozone - without compromising the EU single currency.

He told fellow EU leaders at a summit in Brussels that Britain backed the plan, including sweeping supervision not just for the biggest banks but smaller institutions too.

And over dinner later he was setting out the need not just for a single supervisor to govern the eurozone, but for a comprehensive system of resolution funds - to cover the wind-up of failing banks - and deposit guarantees to restore stability and credibility.

None of the measures would affect non-eurozone countries, but Mr Cameron was seeking assurances that further eurozone integration would not be at the expense of the single market.

Arriving at the summit, the Prime Minister said: "We're in a global race. We need to make sure that we're competitive, we need to make sure the European Union is competitive. And that means deregulation, cutting the costs of regulation, supporting enterprise, it means doing trade deals with the biggest economies in the world, the United States of America, Japan, the fastest growing countries in the world.

"And above all it means completing the thing that matters most for us in Europe, which is the single market. That could be an engine of growth and there's more work to be done."

British pressure to keep up the pace in the face of the continuing economic crisis in Europe came as French President Francois Hollande effectively told Britain not to try to dictate to the eurozone.

Mr Cameron's case is that measures being taken inside the eurozone must be closely studied to ensure they do not impinge on the rest. He was even hinting at UK support for a separate budget for the eurozone countries in future - although at present Mr Cameron says he cannot see how it could be introduced without implications for the wider EU budget.

After lunch Mr Cameron and other ECR leaders put their names to a statement on the eurozone crisis declaring: "The euro area crisis has prolonged the financial and economic crisis for the whole EU. It is therefore essential that all members of the EU and particularly members of the euro area pursue economic reform and re-establish sound public finances as the basis for long-term recovery and a return to prosperity.

"We believe that whilst a certain degree of further integration of the euro area may be necessary to ensure the single currency is able to secure the confidence of the markets and return to stability, the rights of non-members of the euro area who wish to remain outside the scope of such measures should be fully respected, in particular in the single market."