What took place in Brussels in the early hours of yesterday morning was nothing short of a disaster for Britain, and perhaps for the European Union and its single currency, too.
Britain is now more marginalised from the rest of the European Union, and more bereft of political allies on its own continent than it has been for more than a decade – some might say since it joined the European Union in 1973.
The Prime Minister allowed Britain's national interest to be dictated to him by 90 Eurosceptic MPs. Small matter that they constitute a mere 15 per cent of the current Parliament. They have shown how a small group, sharing a clear objective and loudly trumpeting an absolutist cause, can countermand the majority. From the moment the gravity of the euro crisis became apparent, Britain's sceptics had identified an opportunity to realise their goal: the UK's withdrawal from the European Union. The events of the past 48 hours regrettably bring that eventuality closer, de facto, if not – yet – de jure.
As dawn broke yesterday, Britain appeared to have three allies in its refusal to accept amendments to existing EU treaties as a means of salvaging the euro: the Czech Republic, Hungary and Sweden. That was three out of a possible 26. By mid-morning, the cold, hard light of day had persuaded all three to qualify their position and open the door, at least a crack, to signing a new financial accord. Britain's isolation was complete.
In the domestic political short term, Mr Cameron may have achieved his "handbag" moment. "Standing up to Brussels" rarely lost any British leader votes. The Mayor of London, Boris Johnson, who has bombastically championed the City's cause, credited the Prime Minister with "playing a blinder". For a while, then, all may be quiet for the Conservatives on the home front.
But there should be no doubt about the overall price that must be paid for this short-term gain. At the most elementary, diplomatic level, Britain is to all intents and purposes friendless in Europe. Continental European preconceptions about Britain's semi-detachment from the EU project have once again been confirmed. Mr Cameron has left the impression that Britain only ever wanted to be part of Europe on its own, narrow, self-interested terms. There is no reason why any EU country should now be amenable to cutting Britain any slack.
This is doubly unfortunate, because for the best part of a year Mr Cameron and his ministers had given almost the opposite impression. While they might at times have sounded a Eurosceptical note at home, they had nonetheless stuck to the message that the survival of the euro – and a strong euro at that – was in Britain's national interest. Given that the bulk of Britain's trade is with the eurozone and the bulk of inward investment, too, that was the wise and pragmatic course. The message conveyed by the veto Mr Cameron has now wielded is quite different.
Britain also risks being isolated economically. Mr Cameron's chief reason for declining either to amend existing treaties or to join a new, discrete, financial accord was to protect the position of the City of London as a European and global financial centre. The fear was that existing or new regulation would be extended across the Channel, to the detriment of London's "competitive advantage".
But it has to be asked how long London's primacy as a world financial centre, let alone any competitive advantage, can endure if Britain now floats off, metaphorically, into the Atlantic. Much of the City's attraction to foreign business at present derives from its position in Europe. Mr Cameron's refusal, in essence, to countenance tighter regulation of the City may appeal to some, as giving free rein to the natural dynamism of the market. But it will also repel others, who already blame the UK's loose regulatory regime and cavalier banking practices for helping to trigger the global financial crisis in the first place. It is not at all clear that in his professed determination to protect the City, Mr Cameron has not, in the longer term, signed its death warrant.
Beyond the confined vision of Conservative politics, the Prime Minister's veto risks bringing into being the worst of all possible worlds. If success in diplomacy is about achieving national objectives, while not alienating other people, Mr Cameron has single-handedly created the conditions for the two-speed Europe he decried, while displeasing almost everyone else around. Britain will be in the slow lane, if it is in any lane at all, and without even the limited say on eurozone matters it was able to claim before. What is more, Britain's absence from any new accord could weaken both the effect of the agreement and the European Union as an institution. Mr Cameron used to argue that the health of the British economy required a healthy euro; why is this suddenly no longer so?
Another mystery about Mr Cameron's veto concerns the silence of the Liberal Democrats. In the long run-up to this week's EU summit, the increasingly shrill voices of Britain's Eurosceptics went almost unchallenged. Yet, with seats in government, the post of Deputy Prime Minister and, in Nick Clegg, one of the most pro-Europe leaders in their history, the Liberal Democrats had the most prominent platform they have ever had to make the case for Britain's engagement in Europe. Instead, there was silence, followed yesterday – the morning after the night before – by a strange reticence. Yes, the Deputy Prime Minister agreed that Britain's national interest, as represented by the City of London, had to be defended, but he regretted the breakdown of the talks and had done his utmost behind the scenes to prevent it. No, the veto was not something that would break the Coalition.
That conclusion is a sad reflection on the importance of Europe, even to Britain's most Europhile party. The fact is that Mr Cameron's veto could, and should, have been a Coalition-breaker. Long-term international calculations have been forced to yield, for the umpteenth time, to the quest for short-term domestic gain. If, in the end, the euro fails, British myopia must share the blame.