Cameron under pressure over 'semi-detached' approach to Europe as banking rules row looms

David Cameron makes little secret of his distaste for European Union summits. He is only half-joking when he complains about the many hours he spends trapped in the Justus Lipsius building in Brussels, where EU leaders gathered yesterday for their 22nd meeting since 2010 to discuss the eurozone crisis.

Arriving in Brussels, the Prime Minister reiterated a familiar mantra about the need to extend the 20-year-old single European market, the EU's “greatest asset”, to digital services and energy. He warned there was “a danger of European countries and the EU falling behind” in the global economic race.

Britain is on the margins of the two-day session that concludes tomorrow. The main business is the fiscal union being forged as part of the rescue plan for the single currency.

But one key element - a banking union due to be rushed through by the end of the year-could have an impact on the City of London even though the UK will not join it. Mr Cameron's top priority is to ensure that the banking union rules are not imposed by the 17 eurozone nations on financial services throughout the 27-nation EU.

The bad news for the City is that there are growing signs that other EU leaders are losing patience with Britain's semi-detached approach. They do not like being lectured about the need to reform the euro by a country that has no intention of joining (unlike most of the 10 other “outs”).

There is also bemusement in several European capitals about the Mr Cameron's plan to use the fiscal union discussions to renegotiate the terms of Britain's EU membership - and put the “new settlement” to a referendum after the 2015 general election.

Mr Cameron is under mounting pressure from Tory backbenchers, and Cabinet allies including the Education Secretary Michael Gove, to threaten to quit the EU if the “new settlement” is not good enough. The Foreign Office fears such threats might be met with a shrug of the shoulders in Paris and Berlin. “We are playing with fire,” one pro-European UK minister admitted.