January 23, 2013 8:31 pm

Cameron puts EU future on the line

David Cameron put Britain’s future in the EU on the line in an audacious gamble that united his Conservative party but could have profound implications for the country.

The UK prime minister promised on Wednesday that if he wins the next election, he will hold an in-out referendum on Britain’s EU membership by the end of 2017, putting his faith in fellow European leaders to offer London better terms in the meantime.

Mr Cameron said in a long-awaited speech on Europe that he believed he could win a better deal for Britain – including the repatriation of powers from Brussels – insisting that “with courage and conviction” he would win the argument.

He said he had “no illusions about the scale of the task ahead”, a statement immediately reinforced by the reaction in Berlin and Paris where politicians made it clear they wanted Britain to stay in the club – but not at any price.

Laurent Fabius, France’s foreign minister, said France would “roll out the red carpet” to fleeing business people if Britain left the EU, while Germany’s foreign minister Guido Westerwelle said “a policy of cherry picking is not an option”.

Downing Street was more encouraged by the measured response of Angela Merkel, German chancellor, who said: “We are naturally ready to discuss the British wishes but one should bear in mind that other countries have their own wishes too.”

Ms Merkel is expected to draw the line at allowing Mr Cameron to unpick EU treaties; she fears that could lead to other countries, including France, negotiating to rip up the rules of the single market.

If Mr Cameron wins the British election in 2015, he will need German backing to secure a “flexible, adaptable and open European Union” before putting the final deal to the British people two years later.

Mr Cameron refused to say whether he would campaign for Britain to leave if those negotiations failed, although it is certain that a sizeable chunk of his party would press for an exit.

The uncertainty around Britain’s European membership did not disturb the markets – Mr Cameron’s speech had been widely trailed – but it brought warnings from some business leaders that it would deter inward investment.

However, Paul Walsh, chief executive of Diageo, the drinks maker, was one of a number of business leaders to endorse Mr Cameron’s quest for “a new settlement to take account of the different needs of the eurozone and of those countries – like the UK – which will be in the single market”.

Mr Cameron’s speech garnered a euphoric reaction from Conservative MPs, stirring passions which previous Tory prime ministers have struggled to control. The prime minister has warned before of the risks of the party “banging on” about Europe.

He fears that if the Tories appear to be obsessed about the issue it will turn off voters. Tory pollster Lord Ashcroft on Wednesday urged the party’s MPs to pocket their victory and “talk about something else”.

Tory divisions over Mr Cameron’s post-2015 strategy are also likely to surface but, on Wednesday, the prime minister was enjoying a rare moment of party unity on Europe as well as the discomfort of Ed Miliband, Labour leader, who opposes an in-out referendum but has left open the door to matching the policy nearer the election.

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