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UK officials will join talks over eurozone deal UK 'fully engaged' in eurozone deal talks
(40 minutes later)
UK officials will join talks over what should be in a eurozone fiscal pact, despite refusing to sign up to it. Downing Street says Britain will be "fully engaged" in talks to decide what should be in a new eurozone fiscal pact - despite deciding to stay out of it.
The European Council invited them to join talks with 17 eurozone and nine other EU states considering signing up. David Cameron argued it was not in UK interests to join, but officials will take part in "technical discussions".
David Cameron vetoed an EU-wide treaty change involving all states and faced claims it would leave the UK isolated. A spokesman said the PM wants the pact to succeed and to "engage constructively" with the process.
It comes as French finance minister Francois Baroin added to tension between Paris and London by saying the British economy was "very worrying". Labour said he was "being forced to backtrack on his damaging decision to flounce out of the room".
David Cameron has denied claims that relations with French President Nicolas Sarkozy have been strained by his refusal to sign up to an EU-wide treaty last week on the grounds that UK interests were not sufficiently protected. Mr Cameron vetoed the prospect of an EU-wide treaty change which would have included Britain last week - arguing there were not sufficient safeguards for the UK.
'Rather be French' 'Given up seat'
Instead all EU states apart from Britain are considering signing up to a new agreement which aims to introduce closer fiscal integration in the eurozone with tougher rules on debts and deficits.
He faced criticism from Labour's Ed Miliband that by doing so he had "given up our seat at the table" and with it, the chance to secure the best deal for Britain.
But Downing Street said on Friday it had been invited to join technical discussions about what will go into the intergovernmental accord - which EU leaders hope will be drawn up by February.
Following reports the UK officials would have "observer status" - Downing Street said they have been invited to join as "equal participants".
"We will be fully engaged," she said.
Whether the EU Commission and other EU-wide bodies can be used to enforce and monitor rules applying to the new grouping is likely to be one of the most controversial points up for discussion.
Tax policies
However the UK will not have a vote and BBC Brussels correspondent Matthew Price said it was unlikely that the UK would be present at future meetings of the grouping, once the text of the fiscal pact was agreed.
Although all other EU states apart from the UK agreed to consider signing up to a new intergovernmental treaty - some doubts have been expressed by some non-eurozone states.
It is not yet known what will be in the new accord - France and Germany have floated ambitious proposals for a common eurozone corporate tax base and financial transactions tax, which were not in the text of the agreement at last week's Brussels summit.
The Czech and Hungarian leaders said they would not sign anything that would force them to give up independent tax policies.
Shadow foreign secretary Douglas Alexander said: "David Cameron is already being forced to backtrack on his damaging decision to flounce out of the room last week.
"But accepting limited participation in technical discussions will not give us any leverage where it really matters.
"While the Czechs and Hungarians are negotiating hard from a position of strength, David Cameron has deliberately chosen to sit on the sidelines, forced to lobby others to do his work for him."
Mr Cameron has denied claims that relations with French President Nicolas Sarkozy have been strained by his refusal to sign up to the EU-wide treaty last week.
'Credible plan'
France has been warned by US credit ratings agency Standard and Poor that it could be downgraded over the eurozone crisis.France has been warned by US credit ratings agency Standard and Poor that it could be downgraded over the eurozone crisis.
On Thursday, the chairman of the French central bank, Christian Noyer, suggested that any downgrade should instead start with the UK "which has more deficits, as much debt, more inflation, less growth than us".On Thursday, the chairman of the French central bank, Christian Noyer, suggested that any downgrade should instead start with the UK "which has more deficits, as much debt, more inflation, less growth than us".
Mr Baroin told Europe 1 radio on Friday: "The economic situation in Britain today is very worrying, and you'd rather be French than British in economic terms."
Downing Street downplayed the remarks, saying: "We have put in place a credible plan for dealing with our deficit and the credibility of that plan can be seen in what has happened to bond yields in this country."Downing Street downplayed the remarks, saying: "We have put in place a credible plan for dealing with our deficit and the credibility of that plan can be seen in what has happened to bond yields in this country."
And a spokesman has rejected suggestions Mr Cameron has been agitating against the eurozone agreement - after the PM spoke to his counterparts in non-eurozone countries this week. A spokesman has rejected suggestions Mr Cameron has been agitating against the eurozone agreement - after the PM spoke to his counterparts in non-eurozone countries this week.
'Equal participants' The spokesman said the PM's aim had instead to make it clear that the UK wanted to "engage constructively" in talks about the deal between eurozone and other EU states.
The spokesman said the PM's aim had instead to make it clear that the UK wanted to "engage constructively" in talks about the intergovernmental agreement between eurozone and other EU states.
All EU states apart from Britain are considering signing up to the agreement, which aims to introduce closer fiscal integration in the eurozone with tougher rules on debts and deficits.
No 10 said the UK would now join "technical discussions" about what would be in the deal - which EU leaders hope will be drawn up by early February - as "equal participants". However it will not have a vote.
But BBC Brussels correspondent Matthew Price said that despite the UK being invited to join talks about what would be in the arrangement, it was unlikely that it would be present at future meetings following an agreement.
The Financial Times reported that UK officials might have "observer status", allowing them to monitor discussions on the role EU institutions may play in enforcing the deal.
National interest
Richard Corbett, an adviser to President of the European Council Herman Van Rompuy, told BBC Newsnight UK officials would "have the right to speak at those talks and put their view forward".
But he said, as it was not signing up to the agreement, it "will be in a sense an observer at those talks".
Downing Street said a British delegation would be "there to ensure that the views of the UK are represented and our national interest is maintained".
Whether the EU Commission and other EU-wide bodies can be used to enforce and monitor rules applying to the new grouping is likely to be one of the most controversial points up for discussion.
Tax policies
BBC Europe correspondent Chris Morris said it remained to be seen what France and Germany, among others, would try to get inserted into the text of the new accord.
He said Franco-German proposals which emerged before the summit were much more detailed and ambitious - on issues like a common eurozone corporate tax base and financial transactions tax - than what had actually been agreed in Brussels.
And it remained to be seen if all the other 26 states would sign up.
On Thursday the Czech and Hungarian leaders, whose countries are not in the eurozone, said they would not sign anything that would force them to give up independent tax policies.
'Bad for Britain'
Mr Cameron supports moves for closer fiscal integration within the eurozone to help it deal with its debt crisis.
But he would not agree to treaty changes that would involve all 27 EU states last week, arguing he had not been given safeguards for the UK's financial services industry and access to the single market.
Mr Cameron's critics accused him of leaving Britain without a seat at the table when important issues that could affect Britain - like the single market - were discussed.
And his deputy PM, Lib Dem leader Nick Clegg said later the outcome was "bad for Britain".
But Mr Cameron told MPs that signing up to a treaty which would have "changed the nature of the EU - strengthening the eurozone without balancing measures to strengthen the single market" would have been the biggest danger.