Lord Mandelson: David Cameron's impossible demands are alienating his natural allies leaving Britain drifting towards EU exit

Britain is drifting towards the exit door of the European Union because David Cameron’s impossible demands are alienating his natural allies, Lord Mandelson claimed today.

The former Labour Cabinet minister and European Commissioner said other EU members did not want the UK to leave the 27-nation bloc but would not allow Britain to “wreck or paralyse” the Union. He warned that Mr Cameron’s demands for some powers to be returned from Brussels to Westminster were ill-timed when EU leaders were focused on the turmoil in the eurozone.

“We are bombarding our partners with selfish demands while they are coping with the crisis,” he said. “It is like negotiating with a fire engine on its way to a fire. Our actions are looking like sabotage and the patience for paying for British exceptionalism is running out.”

Exactly 30 years after the law which took Britain into the Common Market received Royal Assent, Lord Mandelson urged the Prime Minister to adopt a more constructive approach in negotiations over the EU budget and fiscal union among the 17 eurozone members. He told the National Association of Pension Funds in Liverpool: “Hard Eurosceptic instincts are at risk of provoking an irreversible – or less reversible – break. We must stop painting ourselves into this corner.”

Lord Mandelson added: “Our European partners are losing interest in us. Once, they would have considered anything to keep us on side and they are still nice to our faces. They still firmly want Britain in not out. They like our influence and outlook. But not at any price. Berlin, for example, is bothering less with Britain’s foot stamping strategy. Our staunch allies elsewhere will drift away if they see Britain as destructive rather than constructive.”

The former Trade Commissioner insisted: “We should have only one European priority at the moment: making sure the eurozone survives. Whatever you thought of the idea of creating it, there’s only one idea worse and that’s encouraging it to fall apart, with all the economic consequences that would bring.”

Allies insist Mr Cameron will play a constructive role in seeking a resolution to the problems in the Eurozone at a two-day summit of EU leaders in Brussels starting today. But the Prime Minister will insist that he will only support fiscal union, which needs the approval of all 27 EU members, if the City of London and the single market are not undermined.

Although Britain will not join a proposed banking union to be discussed at the summit, there are fears that the 17 euro members will dictate decisions of the European Banking Authority (EBA), which sets regulations for banks in all 27 EU nations. Mr Cameron will seek safeguards to prevent the 10 non-euro countries being outvoted on the EBA’s governing body.