One week ago the Chancellor George Osborne claimed that signing up to the latest EU reforms of the banking structure would leave him looking like "an idiot". However, with further discussions on the subject timetabled this week, it seems that he may be ready to soften his stance.
The UK objections centre on French and German desires to alter the way the Basel III capital requirements are implemented in European banks.
Basel III is an internationally agreed set of rules designed to ensure that banks keep enough cash in reserve to protect themselves from a downturn in the market.
The UK argued that the Basel III rules should be implemented in full with a 'leverage ratio' based on balance-sheet numbers, whilst the French, Germans and other EU states wish to implement a softer 'risk-weighting' proposal.
The UK argued that if the softer measures were indeed to be used then it would reserve the right to impose stricter capital requirements on individual banks without the need to gain EU approval. The UK stance, Osborne argued, was justified as it is ultimately taxpayers who have to bail out struggling banks.
Talks on the agreement are scheduled for tomorrow, but the news that Mr Osborne may change his stance and sign the deal will baffle some as there have been no substantive changes to the text he was so opposed to signing a fortnight ago.
The deal is far from secure at this stage, with tough negotiations opening with the EU Parliament once the Council of Ministers has signed off on the proposals. It is thought the Parliament will lobby for strict pay curbs on bankers' bonuses, something which is alarming the EU's major investment houses.
It is thought the parliamentary discussions to come form part of the reason for Mr Osborne changing tack. It is also thought that subsequent analysis of the deal brokered two weeks ago has revealed that there is nothing in it to stop the UK implementing the Vickers Banking Reforms, something which the Chancellor is very keen to do.
Some delegates at the stalled talks two weeks ago believe that Mr Osborne's position was driven by nationalism.
EU Commissioner Michel Barnier said: "It boils down to an opt-out. Let's simply reassert our national freedom and have Basel III on a national basis."
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