Fraser Nelson

The coming showdown

• From magazine issue: 17 November 2012

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  The coming showdown

  

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Alexander Larman

What happened to the Rishi Sunak I knew at school?

As Merkel will know, there is only so long a democracy can be kept in a club against the wishes of its people. The EU model has so far depended on the collusion of elites, but in Britain this model is failing. Public opinion has found a way into the debate, being regularly and elegantly expressed through parliamentary rebellions. The most recent one saw the House of Commons tell the Prime Minister not to come back from next week’s summit with an EU budget for 2014-20 that involves spending increases. Having already portrayed himself as a veto-wielding Boudicca, it would be hard for Mr Cameron to defy them.

As one senior diplomat puts it, ‘a ruction is now far closer than we think’, but not because of British exasperation. The ruction could come from Merkel and others who are thinking of ways to circumvent Britain, cutting us out of the important decisions while keeping our £8 billion-a-year membership fees.

If Cameron wants a frozen EU budget, all he needs to do is wield his veto and one will be imposed automatically. But he’d face bitter resentment from the smaller, newer EU member states that have been promised far more subsidy.

So when it comes to the next big debate — banking regulation — the other EU member states may simply seek to cut Britain out of the equation and agree a deal among themselves, just as they did last December. In this way, Merkel would have set up a new power bloc, formalising the group that carried on when Cameron found himself edged out last Christmas. The new banking regulator would be free to regulate business out of the City of London, ignoring British complaints.

Unacceptable, Cameron may say. He’d be right. But what is his alternative? To withdraw from the European Union involves a battle for which his coalition government is utterly unprepared. This leaves him vulnerable, and Mrs Merkel knows it. The Brits may be heckling already, but things could get a lot worse — and her Muppet Show has a long while left to run.