“The United Kingdom, in exchange for giving its agreement, asked for a specific protocol on financial services which, as presented, was a risk to the integrity of the internal market. This made compromise impossible.As we mentioned in passing yesterday (see here), this simply wasn’t the case.
All other heads of government were left with the choice between paying this price or moving ahead without the UK's participation and accepting an internal agreement among them."
Cameron’s first set of demands were to ensure that unanimity applies on decisions relating to: transfer of powers to EU supervisory agencies, the use of 'maximum harmonisation', issues impacting on fiscal interests of member states (taxes & levies) and the location of EU Supervisory Authorities (ESAs). In actual fact, Cameron's demands did not relate to the level of financial supervision but the rules governing the transfer of powers from member states to those EU supervisors. This is quite different to the functioning of the single market.
As is also instantly clear, there were no UK-specific demands, especially not for some form of opt-out as Barroso seems to imply. So, whether you agree with Cameron’s demands or not, it is clear that he was not seeking special treatment for the UK, these rules would allow unanimity for all EU members.
The case can, and should, also be made that, in terms of content, Cameron was defending the single market, particularly on the location of ESAs (i.e. they can't all be in the eurozone) and in defending the UK against the ECB's insistence that sizeable euro-denominated transactions only be cleared within the eurozone.
The source of the confusion seems to be that many people are conflating trying to protect a vital UK industry with seeking special treatment for the UK – these are clearly not the same thing legally or practically when it comes to the EU. All governments in EU negotiations try to protect their vital industries, for example: France with agriculture, Spain with fishing and Germany with manufacturing exports, and in some cases these countries have more protection than the UK does on financial services despite it representing a bigger share of the UK economy (see our recent report for a full discussion of this issue).
The other major misconception is that the UK's demands were to shield the City from all regulation - one major demand would have allowed the UK to impose tougher capital requirements on banks than permitted by the EU's desire for 'maximum harmonisation', for example. This was protection for taxpayers, not bankers. The Commission's logic that maximum harmonisation is necessary for the functioning of the single market is flawed and not one that it applies in other areas of EU policy. For example, on cutting carbon emissions, member states are free to go beyond the EU-agreed minimum.
Overall then, the UK did not seek any special treatment or specific opt-outs. Cameron asked for safeguards relating partly to an industry which is of importance to the UK (and other countries), but safeguards which could be accessed by all EU members. Neither the structure nor content of his demands were in anyway designed to hamper the single market, but in fact to bolster it. It can only be damaging to the integrity of the EU that the Commission President should openly encourage such a misconception.