British PM heading for fresh collision with EU over spending

EUROPEAN DIARY:THE BRITISH prime minister has threatened to wield his veto in imminent talks on the EU budget – and increasing chatter about a referendum on Europe after the 2015 election points to a push to claw back powers to London first.

None of this comes as any great surprise. Although David Cameron entered office in 2010 insisting he would not angle for a “bust-up” in Europe, he got one soon enough. His refusal to adopt the fiscal treaty in December marked a drastic turn for the worse in his relations with other EU leaders.

In spite of the plaudits he received from the (admittedly large and powerful) Eurosceptic flank of the Tory party, this was seen elsewhere as a monumental and unnecessary error. At a time of high tension in the euro zone, the man from Downing Street isolated himself in the summit chamber. It matters little that Britain does not use the single currency. If the euro fails the blowback on London would be enormous.

Now Cameron is bracing for a fresh confrontation, this time over the EU budget. Brussels-based observers of the Westminster fray are already in a state of nervy anticipation.

European Council president Herman Van Rompuy has called a special summit next month to settle a seven-year spending plan for the union for 2014 until 2020. At issue is a €1.03 trillion proposal from the EU Commission, which is roughly 5 per cent more than in the previous budget round.

At a time of near universal austerity, many countries say it is unacceptable that the European budget would rise by this amount. It follows that a scaling back in the commission proposal is already inevitable. But Cameron wants a “real freeze” in the budget, saying is prepared to block a deal if necessary. The reasoning here is that it would be impossible for him to persuade MPs to endorse any increase at a time when he is imposing very big cutbacks in his domestic budget.

If the feeling in London is that this sense of urgency is not matched elsewhere, there is anxiety in Brussels that Cameron is turning up the heat again.

No one disputes that the November negotiation will be a challenge – it could go on for days and might yet spill into Ireland’s EU presidency in the first half of next year. Among senior Europeans, however, there is some concern that an overly assertive Cameron could make an already difficult situation in the EU messier still. In the backdrop here is a rebellion by almost 80 Tory MPs, who defied Cameron a year ago to back a Commons motion calling for a referendum on Britain’s membership of the EU.

This was seen to narrow the prime minister’s scope for manoeuvre on European issues and questions remain as to how far he might go to appease his restive backbenchers.

It is acknowledged that Tory Eurosceptics are a diverse bunch these days, their demands ranging from outright withdrawal to a less radical renegotiation of terms of Britain’s membership.

At the same time, the pro-Europeans are a rare breed today and much scarcer than in the bloody heyday of the party’s epic battles over Europe under Margaret Thatcher and John Major. This may well be a fair reflection of British public opinion, but in political real time it makes the dynamic at the summit table more complex.

While Cameron wants Britain to stay in the EU, his push to change his country’s relationship with it has a knock-on impact on everyone else. With the struggle to save the euro still not won, this heralds further strain.

Yet the EU is changing rapidly. There have been two rounds of treaty change since the Lisbon pact was enacted in 2009 and more changes loom. As the rulebook is redrawn again to reinforce the euro, this will probably provide an opportunity to deal with the Cameron question. He favours the idea of a separate budget for the euro zone, a new and still poorly defined notion. Whatever the finer detail, the implication is that a radical deepening of integration between the single currency countries would provide a simultaneous opportunity for Cameron to loosen Britain’s ties with the EU.

That’s not quite a recipe for harmony in Europe but there may be no avoiding it.

The nearer Cameron comes to promising a referendum if he is re-elected, the more difficult it becomes for other heads of state and government to turn him down. Although he does not favour a simple In/Out vote, the presumption must be that he will need an appreciable deal to ensure the success of any vote to recast the country’s membership.

In turn, that raises tricky questions as to whether any other leader makes copycat claims for special treatment.

This is one to watch, even if some people in Brussels would rather look away altogether.