- guardian.co.uk, Monday 5 October 2009 23.45 BST
Boris Johnson is no fan of Brussels when it comes to EU affairs. Photograph: Daniel Berehulak/Getty Images
Tory divisions over Europe were laid bare today when Boris Johnson and Kenneth Clarke, the party's two most popular figures, clashed over Britain's relations with the EU.
Adding to the irritation at senior levels of the party that Europe is once again dominating a Tory conference – in the wake of the Yes vote in Ireland on the Lisbon treaty – Clarke and Johnson offered opposing visions.
Johnson, who first made his name as a Eurosceptic journalist in Brussels in the early 90s, pledged to fight plans by the European commission to tighten the regulation of financial markets. Meanwhile, Clarke told the conference fringe that Britain and the US are in no position to offer lectures to the French and Germans after the "catastrophic failure" of financial regulation.
The clash of two such high-profile figures ensured that Europe was one of the main issues on the first day of the Conservative conference in Manchester. Tory leader David Cameron found himself under pressure today after the Guardian reported that he is to rule out a referendum on the Lisbon treaty if, as seems increasingly likely, all 27 EU member ratify the measure before the British general election next year.
The Conservative leadership went to great lengths to play down any sense of division after Johnson called for a vote even after the treaty is ratified. His remarks led Andrew Rosindell, a shadow minister, to call for a referendum "whatever the circumstances". Tory sources said there was no disagreement and that Rosindell had not been fully aware of the policy.
But Clarke and Johnson showed that Europe remains a highly divisive issue for the party. The London mayor sparked the debate today when he pledged to resist any legislation which penalises the City. To cheers, Johnson said: "I am willing to take the fight to our friends and partners in Brussels against ill-thought-out regulation."
Johnson then brought up the subject of Tony Blair, frontrunner to become the first president of the European council if the Lisbon treaty is ratified. Johnson said: "They may be nos amis et nos partenaires but no matter what kind of flashing, glistening eyes president they may shortly install they are not above poking the City in the eye."
Clarke challenged Johnson a few hours later when he told the pro-European Conservative Europe Group that Britain had to be careful about lecturing its European partners about regulation: "We must avoid British arrogance in going along and saying to the French and Germans that we are the only people who understand about the regulation of financial markets.
"British regulation of financial markets and American regulation of financial markets was a catastrophic failure. So you can understand French and German and others' reluctance to have people from the City of London coming round and explaining how you should regulate financial markets."
Clarke said it was wrong of the French and Germans to blame hedge funds and private equity firms for causing the recession. But he said that it was right for greater "pan-national" co-operation between national regulators.
The shadow business secretary also dismissed "hysteria" from the City, and with it the mayor, that Britain's financial services would be forced abroad. "This is the end of the world as we know it – they're all going to move and set up their businesses under palm trees," Clarke said, mocking the City's stance.
In his fringe appearance Clarke agreed with Cameron's stance on the Lisbon treaty but then picked apart his Euroscepticism. He pleaded with the party to engage with Europe as he praised the European commission and dismissed key Eurosceptic claims that 75% of British laws are imposed by Brussels.
Clarke said that José Manuel Barroso, the European commission president, had done more to deregulate than any British minister: "Barroso has made more progress [on deregulation] than any British government – eagerly declaring an interest in deregulation – has managed to do domestically so far."
Europe will return to the fore tomorrow when the Tories welcome two controversial rightwing MEPs from Poland and Latvia. Michal Kaminski, the leader of the Tories' new caucus in the European parliament, and Roberts Zile, leader of the Latvian For Fatherland and Freedom party, will address fringe meetings.
Kaminski has been accused by Labour's David Miliband of having an antisemitic past. Members of Zile's party take part in annual celebrations of a Latvian unit of the Waffen-SS.
Günter Gloser, Germany's outgoing Europe minister, said Cameron's decision to leave the main centre-right EPP grouping in the European parliament had made the Tories an "isolated faction". Gloser is a member of the SPD, Labour's sister party.