Coalition at odds over EU as Tories call for referendum on fiscal union

Meanwhile, Merkel and Sarkozy to meet ahead of make-or-break summit to save euro

Paris

The tricky balancing act facing David Cameron over Europe became even more difficult yesterday when the tensions between the two Coalition parties burst into the open.

Iain Duncan Smith, the Conservative Work and Pensions Secretary, endorsed demands by Eurosceptic Tory MPs for a UK referendum on the proposed new EU treaty to entrench budgetary discipline in the 17 eurozone countries. But Nick Clegg, the Liberal Democrat Deputy Prime Minister, flatly rejected the calls and made clear he had no intention of allowing a public vote on Europe.

Yesterday Mr Duncan Smith appeared to stray beyond the Coalition's policy that a referendum would be held only if Britain ceded more powers to Brussels. He told Sky News: "We're the first government ever to have legislated for referendums on treaties. In other words, the British public will have a say." He added: "The Prime Minister has always said if there is major treaty change it is now legislated for that we would have a referendum."

But earlier Mr Clegg insisted that the legislation already passed by the Coalition would not require a referendum because the fiscal union would not take any powers away from Britain. He told the BBC's Andrew Marr Show: "A referendum will only take place if there is an additional surrender of sovereignty from us to the EU."

Mr Cameron would prefer any treaty change to need approval by the 17 countries using the euro but Germany would like them to be endorsed by all 27 EU members. That would put pressure on Mr Cameron from Tory MPs to secure "wins" in return, such as the return of some powers from Brussels.

Meanwhile France's President Nicolas Sarkozy and the German Chancellor Angela Merkel will meet for a business lunch at the Elysée Palace in Paris today which could shape the outcome of the most critical week in EU history.

Their success or failure will influence, but not entirely guarantee, the outcome of a profoundly hazardous EU summit in Brussels on Thursday and Friday. Another failed or fudged attempt to resolve the two-year-old eurozone debt crisis could panic markets, explode the euro, cripple banks and tip the Western economy into a deep recession.

Officials say France and Germany have edged closer in recent days but differences remain. President Sarkozy and Chancellor Merkel now agree that the survival of the euro depends on chaining the bloc's 17 economies together with more rigorous rules on debt and deficits. If EU treaty changes are promised to this effect, Germany has hinted that it will ease its objections to a short-term "fix". In other words, it would turn a blind eye to the European Central Bank extending its efforts to prop up heavily-indebted nations.

However, landmark speeches by the French and German leaders within 24 hours on Thursday and Friday revealed some radical differences in approach.

Ms Merkel wants a legally-binding fiscal union – a move towards a "United States of Europe". Fiscal policies would be overseen by an EU national budget commissioner and penalties enforced by the European Court of Justice.

President Sarkozy says this would be a surrender of national sovereignty. Fiscal rules and penalties should be more rigorous, he says, and there should be majority voting to force backsliders into line. But final decisions must not be "supranational" and technocratic. There is also concern in European capitals that Berlin's suggestions amount to a German attempt to have a greater say over domestic fiscal policies.

At a glance: who wants treaty change?

ITALY

New PM Mario Monti in favour - but he has little choice

Disquiet among Italian voters as yet another democratic right ceded to Brussels

FRANCE

Sarkozy's personal future closely tied to euro rescue efforts

Loss of sovereignty to Brussels spells danger for President, as it plays into hands of far Right

GERMANY

Fiscal union seen as way to calm markets and ease risk of further bailouts paid for by Berlin

Giving up rights to Brussels weakens Merkel's already precarious position at home

SPAIN

Greater budgetary control from Brussels represents unpopular blow to national pride

But new PM Mariano Rajoy has little option but to agree, with nation's finances in such a poor state

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Lou Reed distorted the truth about his upbringing, and since his death in 2013, biographers and memoirists have added to the myths
musicThe truth about Lou Reed's upbringing beyond the biographers' and memoirists' myths
News
people
News
Ed Miliband received a warm welcome in Chester
election 2015
Life and Style
Apple CEO Tim Cook announces the Apple Watch during an Apple special even
fashionIs the Apple Watch for you? Well, it depends if you want it for the fitness tech, or for the style
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Project Implementation Executive

£18000 - £23000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Chiropractic Assistant

£16500 per annum: Recruitment Genius: A Chiropractic Assistant is needed in a ...

Recruitment Genius: Digital Account Executive - Midlands

£18000 - £26000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Web Developer

£28000 - £30000 per annum: Recruitment Genius: This company provides coaching ...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own