Cameron insists on British interests as his price for backing eurozone rescue

The Prime Minister insisted that if eurozone countries want to use the “institutions of Europe” to rescue the single currency, they will have to back a number of “British safeguards” in return.

His statement came on another day of economic turmoil, as ratings agency Standard and Poor’s warned it may downgrade the credit rating of the eurozone’s main bailout fund.

After putting 15 members of the single currency – including Germany and France – on “credit watch”, S&P’s announced it was doing the same with the European Financial Stability Facility. French president Nicolas Sarkozy and German chancellor Angela Merkel have called for reform of the treaty, to allow far tougher rules and sanctions in future to reassure markets about the eurozone’s long-term stability.

Mr Cameron said he was heading to talks in Brussels later this week “to defend and promote British interests”.

“Now, the most important British interest right now is to sort out the problem in the eurozone that is having the chilling effect on our economy,” he said.

“That obviously means eurozone countries doing more together and if they choose to use the European Treaty to do that, then obviously there will be British safeguards and British interests that I will want to insist on. And I won’t sign a treaty that doesn’t have those safeguards in it.”

S&P’s warnings over the AAA status of the European Financial Stability Facility and eurozone states had little impact on financial markets yesterday. But the prospect of a possible downgrade will put additional pressure on leaders of the 27 EU states when they gather in Brussels for a two-day summit starting tomorrow.

Under discussion will be the plan agreed by President Sarkozy and Chancellor Merkel. They want treaty changes to be backed by all 27 member states but will settle for agreement of the 17 eurozone members. The move sparked renewed calls from Conservative backbenchers for a referendum on any new treaty.