PM under pressure ahead of EU talks

David Cameron is under intense pressure from his own party over Britain's relations with Europe on the eve of a crucial summit intended to find a solution to the crisis in the single currency.

London Mayor Boris Johnson urged the Prime Minister to call a referendum - or even wield his veto - on any EU-wide treaty that sets the 17 single currency states on the path to fiscal union.

And eurosceptic Cabinet minister Owen Paterson broke ranks to say that a referendum will be the "inevitable" result of moves to forge a closer bloc of eurozone states within the EU.

In the House of Commons, Mr Cameron faced demands from his own backbenchers to use tomorrow's summit to renegotiate the UK's EU membership or block eurozone fiscal union, which veteran Tory Sir Peter Tapsell warned would "pose a great threat to the whole of the liberty of Europe".

Conservative MP Andrew Rosindell urged the Prime Minister to show "bulldog spirit" in the talks between the 27 EU leaders in Brussels on Thursday and Friday.

Mr Cameron responded: "That is exactly what I will do. The British national interest absolutely means that we need to help resolve this crisis in the eurozone.

"It is freezing the British economy just as it is freezing economies right across Europe."

The Prime Minister insisted he will not sign a treaty unless it includes provisions to protect the City of London and the European single market.

"We will insist on safeguards for Britain," he said. "That means making sure we are stronger and better able to do things in the UK to protect our national interests.

"The more the countries of the eurozone ask for, the more we will ask for in return."

But Downing Street made clear that he sees no argument for a referendum in the UK on the treaty changes needed to tighten economic governance in the eurozone.

Nicolas Sarkozy and Angela Merkel wrote to European Council President Herman van Rompuy setting out a joint Franco-German proposal which would impose greater fiscal discipline on eurozone members with automatic sanctions for those which allow their deficits to grow too large.

The French and Germans have made clear they would like the new arrangements to be implemented through a treaty of all 27 EU states, but are ready to press ahead with an agreement between the 17 which use the single currency if that is not possible.

But Mr van Rompuy is expected to present an alternative "fast track" approach to the summit tomorrow, under which changes could be introduced through a "protocol" to existing treaties, which would not require approval from the European Parliament or ratification by national assemblies.

Mr Johnson - a fierce opponent of fiscal union - said that efforts to preserve the single currency in its current form risked "saving the cancer and not the patient".

"It is absolutely clear to me that if there is a new treaty at 27, if there is a new EU treaty that creates a kind of fiscal union within the 27 countries or within the eurozone, we'd have absolutely no choice either to veto it but certainly to put it to a referendum," the Mayor told BBC Radio 4's World at One.

"If they are going to go down that route to fiscal union then certainly I think, frankly, it's the wrong way to go and I think we should be opposing it."

Meanwhile, Mr Paterson told The Spectator magazine: "If there was a major fundamental change in our relationship, emerging from the creation of a new bloc which would be effectively a new country from which we were excluded, then I think inevitably there would be huge pressure for a referendum."

Asked whether a referendum will be required, he replied: "I think there will have to be one, yes, because I think the pressure would build up. This isn't going to happen immediately because these negotiations are going to take some months. But I think down the road that is inevitable."

A source close to Mr Cameron tried to play down the significance of the Northern Ireland Secretary's remarks, telling reporters: "It's a difficult issue and I think Owen was trying to be helpful."

And the PM's official spokesman rejected suggestions that Mr Paterson had made his position untenable, telling reporters: "Clearly there are lots of people currently talking about what is going to happen to the EU over the coming years. They have that conversation against a very uncertain economic backdrop. Therefore, I think it is quite natural you would get lots of debate about what's going to happen."

But Labour leader Ed Miliband said the Prime Minister was reaping the consequences of promises to backbenchers at the time of October's Tory rebellion over Europe that he would use future treaties as an opportunity to demand the repatriation of powers from Brussels to Westminster.

Mr Miliband told a raucous Commons that Mr Cameron had been "promising his backbenchers a handbagging for Europe, now he is just reduced to hand-wringing".

And he added: "The problem for Britain is, at the most important European summit for a generation that matters hugely for families and businesses up and down the country, the Prime Minister is simply left on the sidelines."

In today's letter, the French President and German Chancellor - nicknamed "Merkozy" since they began co-operating closely on the fiscal union plans - called for a "renewed contract between the euro area member states", including monthly meetings of eurozone leaders until the current crisis ends.

And they repeated their call for a tax on financial transactions, which is opposed by Britain unless it is implemented worldwide.

"The current crisis has mercilessly uncovered the deficiencies in the construction of economic and monetary union," they said.

"We need more binding, and more ambitious rules and commitments for the euro area member states. We propose that those new rules and commitments should be enshrined in the European treaties."