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Cameron's euro-woes

Mark D'Arcy | 13:50 UK time, Monday, 1 November 2010

Should David Cameron brace himself for a rough ride from his eurosceptic backbenchers this afternoon?

Or could he face an unnerving silence? The prime minister's due to deliver a Commons Statement at about 3.30pm, on the outcome of his first Euro-summit, having signed up to a budget deal that allows EU spending to rise by 2.9%.

Last week, he argued that this was the first step to pegging back EU spending and was a considerable improvement on the 5.8% increase demanded by the European Parliament.

But over at Conservative Βι¶ΉΤΌΕΔ, - with only 30% of those who took part in a survey regarding the outcome as "a big victory for Cameron".

So it is quite possible that such sentiments may be voiced by some Conservative backbenchers. But I'm hearing that some of those who are most worried by the expansion of the EU budget may decide to keep their powder dry. Instead, the new generation of eurosceptics will listen carefully, note down forms of words and analyse them closely, and study the small print and the footnotes, before deciding what to do next.

One "usual suspect" was less exercised by the 2.9% (although he was far from delighted about it) than by the previous government's agreement to reduce the UK's budget rebate - famously extracted by Margaret Thatcher.

Another was more worried about creeping EU competence extending more and more into the budgetary affairs of member states. Britain's economic management and government spending will be "surveyed" by the EU, but, because we are not members of the euro, and still have sterling, this country can't be punished for breaking euro-rules on government borrowing and so forth.

But there is considerable worry that, in the medium term, the EU will assert more control - and sceptics point to the . The report of a European Council (of ministers) Task Force on Strengthening Economic Governance in the EU. The fear that, through paragraph 34, the UK has already signed up to the idea of an EU wide legal mechanism to harmonise the economic policies of all member states.

"34. The Task Force recommends deeper macro-economic surveillance with the introduction of a new mechanism underpinned by a new legal framework based on Article 121 TFEU (Treaty on the Functioning of the European Union) alongside the SGP (Stability and Growth Pact) applying to all EU Member States, taking into account the specificity of the euro area. The implementation of this mechanism would be done in a way to ensure consistency with the surveillance of fiscal policies, growth-enhancing structural reforms and macro-financial stability, and to avoid duplication and overlap."

The task force was a pretty high powered body - headed by the EU President Herman Van Rompuy, and including the President of the European Central Bank, Jean Claude Trichet. Britain's representative was the Chancellor, George Osborne...

If this paragraph means what they think it means, I wonder if Gordon Brown - famously unwilling to cede Treasury power to anyone - would have permitted his Chancellor to sign up to it, had he still been in power?

In any event Conservative sceptics think there will be plenty of opportunities to influence events. Next Wednesday, the EU Council of Ministers and the European Parliament will negotiate on the budget - and it is at least possible that there will be further compromise, resulting in a budget increase of more than the 2.9%.

Further in the future, Parliament will have to approve the actual budget contribution, and later still there may be a new European Treaty incorporating the Franco-German proposals for stronger economic government in the eurozone - at which point Mr Cameron may find his troops quoting his manifesto promise: "We will ensure that there is no further transfer of sovereignty or powers over the course of the next Parliament" and demanding a referendum.

A couple of weeks ago, 37 Conservative MPs voted against the whip to demand EU budget cuts. Several traditionally sceptical MPs did not join in then, but might do in the future. On the other hand, the whips are said to have been working very hard on the dissidents. But the government majority could be vulnerable, if Ed Miliband decides to back protests against the budget. Which is why a close study of the Labour leader's words in response to the statement could be pretty rewarding as well.

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