Britain’s new role in Europe

The decision to wield Britain’s long-threatened veto has implications not only for our troubled relationship with Europe, but also for the future of the coalition.

The stumbling block for Britain in a deal designed to ensure greater stability in financial markets came over the risks it posed to the City of London. There are indeed good arguments that the the City, which was partly to blame for worldwide financial crisis, needs curbing.

But Prime Minister David Cameron demonstrated courage in facing down European counterparts by refusing to sign up to a deal which would have gifted more powers to Brussels.

The consequences will be far-reaching. Britain will no longer be at that same negotiating table when key decisions are made in future.

It remains unclear how many other countries will sign up to the deal but the decision could leave Britain isolated in a minority of one, with others now harbouring grievances that Britain put its own interests first and refused to help when it came to sorting out chaos in the eurozone, even if the crisis is of others’ making.

In reality, Mr Cameron had little choice other than to use the veto, given that he would have forfeited support from his increasingly eurosceptic party. His decision will now embolden some to demand a referendum to exit the European Union, arguing Britain’s relationship with the rest of our European partners has now changed beyond recognition.

A national vote is something Mr Cameron, and particularly his Liberal Democrat colleagues, will not countenance - and yet it could become the defining issue for many Tory MPs who showed in the 1990s they are prepared to put the issue of Europe above everything.

The arguments will rage as the economy struggles through what may become a decade or more of low growth, which many would argue is by far the bigger issue.

For now, Mr Cameron will be cheered to the rafters by supporters when he reports to MPs next week on actions which seems set to radically re-shape Britain’s future for ever.