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David Cameron faces clash with Conservative eurosceptics

Prime minister drops Britain’s objections to the use of the European court of justice to police tough new fiscal rules for the eurozone

David Cameron is facing a fresh clash with Tory Eurosceptics after dropping Britain’s objections to the use of the European court of justice to enforce a new fiscal compact for the eurozone.

Tory backbenchers met to prepare tactics ahead of a statement to parliament in which the prime minister will explain that Britain does not want to stand in the way of action to solve the eurozone crisis.

Cameron told EU leaders at their summit in Brussels that Britain was unlikely to raise any objections to the use of the European court of justice (ECJ) to police tough new fiscal rules for eurozone members. But he would take legal action if eurozone leaders sought to use the court, or any other EU institution, to rewrite the rules of the single market. He said Britain would officially reserve its position until a new eurozone treaty was formally ratified.

Speaking at the summit, Cameron said: “We don’t want to hold up the eurozone doing whatever is necessary to solve the crisis as long as it doesn’t damage our national interests. So it’s good that the new treaty states clearly that it cannot encroach upon the competences of the union, and that they must not take measures that undermine the EU internal market.

“We will only take action if our national interests are threatened. And I made clear today that we will be watching this closely.”

The prime minister added that eurozone leaders need to step up their action. “While tough fiscal discipline is essential it is vital that the eurozone also recapitalise their banks; end the uncertainty in Greece; and establish a firewall big enough to deal with the crisis. These measures cannot wait. The risks are too great. They are the immediate steps necessary if the single currency is to succeed.”

Tory Eurosceptics warned of a backlash against the latest move. Last month they hailed Cameron when he vetoed a move to embed the fiscal compact in the Lisbon treaty, which set out the EU’s legal framework.

Philip Davies, MP for Shipley, said: “We don’t want David Cameron to go down the road of waving the white flag. This will define whether he’s seen as a Thatcher or a Major. If he caves in I’m afraid the comparison will be with John Major.”

Eurozone leaders are having to negotiate a new treaty outside the formal architecture of the EU after the prime minister wielded the British veto last month to prevent the new fiscal compact being embedded in the Lisbon treaty.

The eurozone leaders hope to sign the treaty in March after inching towards a political agreement in Brussels.

The prime minister said at the time he wielded the veto that Britain was prepared to block the use of EU institutions to enforce the new measures.

He spoke on Monday of how he wielded a veto. “This is a totally separate treaty. That’s because we vetoed an EU treaty in December.”

Conservative MEPs, who met the prime minister in Brussels before the start of the summit, blamed Nick Clegg for forcing Cameron to change his mind. Martin Callanan, the group’s leader, said: “There is no doubt that the government’s position has altered since the December summit when they were insisting the institutions could not be used.

“I blame a combination of appeasing Nick Clegg (who is desperate to sign anything the EU puts in front of him) and the practical reality that this pact is actually quite hard to prevent.”

Douglas Carswell, a Eurosceptic Tory, blogged: “Despite us saying ‘no’ to the rule changes, the rule changes take effect within the club of which we are a part – and without our approval. It is not only the veto that has been circumvented. What assurances do we have that euro club cannot now make yet further changes without our approval?”

As recently as 6 January the prime minister voiced doubts about the ECJ when he said that it “tends to come down on the side of whatever ‘more Europe’ involves”.

The Liberal Democrats will say they have achieved an important victory. The deputy prime minister, who was alarmed by Cameron’s use of the veto, made clear that the EU’s institutions would have to be put at the disposal of eurozone leaders.

The prime minister sought to maintain the focus on the formal agenda of the summit – how to promote growth across the EU. He was given a taste of the challenge when José Manuel Barroso, the president of the European Commission, said that Britain had the same number of young unemployed people as Spain, where almost one in two young people who are available for work is unemployed.

In a slide presentation, Barroso told the summit: “You can also see that the number of young unemployed is close to 1 million in Spain and in the UK. While the UK percentage is lower, 1 million unemployed young people is a big problem.”

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