Politics blog + European Union

George Osborne had a chance in May to veto Britain's involvement in an EU bailout fund he is now criticising. Photograph: Ben Stansall/AFP/Getty Images

George Osborne was highly critical this morning of Alistair Darling's decision in May to sign Britain up to a €60bn EU bailout fund.

This is what the chancellor told the Today programme:

There is a smaller EU mechanism, what is called the European Union mechanism. I wasn't particularly happy that Britain signed up to that. That was my predecessor Alistair Darling who did that.

But we are part of it and really now is not the time, when we are dealing with the very real practicalities of the Irish situation, to try and pull ourselves out of that. What I'm saying is that when we look at the permanent bailout mechanism let us make sure Britain is not part of that because we are not part of the euro, and the euro, in the end, has to work out how it is going to deal with these sort of situations in the future.

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Dollars: China has got a lot of them. Photograph: Corbis

George Osborne did his best to be cheerful about progress at the G20 summit negotiations in Seoul on Radio 4's Today programme this morning. Good. It's what chancellors of the exchequer are paid to do. The BBC itself helped him by leading its bulletins on the relatively trivial matter of the EU budget battle.

The odd billion paid – or not paid – to Brussels won't matter much if the brown stuff hits the global fan in the next year or two, which it might as creeping trade protectionism and competitive currency devaluations make the recession up to now look relatively benign.

In asserting that "we're making steps in the right direction", Osborne cited progress on IMF reform that will give greater clout to emerging economic giants such as China, India and Brazil, provide stronger bank regulation and better mutual understanding of the need to avoid beggar-my-neighbour trade policies, and achieve better currency balances between creditor/exports and debtor/importers – notably China and the US.

The upside is that all the players in Seoul have read the textbooks and know what they ought to do to avoid repeating the 1930s, which – I can't stress this enough – ended in world war as the default remedy for a crippling Great Depression.

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David Cameron appears to be fighting a cold. But he was on sparkling form today when he hosted a press conference in Brussels at lunchtime as the EU summit wound down.

That is no mean achievement. The prime minister is under pressure from Tory Eurosceptics who are dismayed by his decision to abandon a campaign to cut or, at least a freeze, the EU's £107bn budget next year.

The sceptics will see straight through the prime minister's claim that he has won a famous victory after persuading 12 EU leaders to agree that the budget increase should be limited to 2.91%. This means, as I blogged in the early hours of this morning, that Cameron has persuaded France and Germany to support their long-standing position. Britain has, by contrast, shifted its position away from demanding a freeze.

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David Cameron claims he won a famous victory in Brussels after persuading France and Germany to sign a letter supporting their own positions. Photograph: Ben Stansall/AFP/Getty Images

Here's what David Cameron wants us to think.

The prime minister strode into Brussels on Thursday afternoon. In a sign of growing British influence, he persuaded ten other EU leaders to sign up to a letter denouncing a European Parliament vote to increase the union's budget for 2011 by 6%.

That is true, up to a point. Angela Merkel, the German chancellor, and Nicolas Sarkozy, the French president, did indeed sign a letter dismissing the 6% rise and calling instead for a more modest rise of 2.91%. The prime minister was applauded when he told EU leaders round the table at their summit that everyone had to tighten their belts in this age of fiscal austerity.

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Cameron and Blair in 2006. Photograph: Jonathan Buckmaster/PA

If David Cameron finds the Treasury a little tricky in his negotiations over the EU budget in Brussels this evening, he could always follow the example of Tony Blair.

During tense negotiations over Britain's EU budget rebate in 2005, the former prime minister became so exasperated with the Treasury that he kidnapped its man in Brussels.

Jonathan Powell, Blair's former chief of staff, relates the hilarious story of the kidnapping which took place when Gordon Brown refused to let the then prime minister examine Treasury figures on the EU budget.

Blair and Powell turned into kidnappers when Jean-Claude Juncker, the prime minister of Luxembourg who held the EU presidency in the first half of 2005, summoned him. Powell writes in his memoirs, The New Machiavelli:

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David Cameron finds himself on the back foot as he heads to the EU summit in Brussels. Photograph: PA

Watch out! Europe is back on the front pages. That's always a sign of trouble ahead – just what the coalition could do without, because it's a dividing line between the Conservatives and their Lib Dem civil partners.

The Tory right, quiescent up to now, will be especially upset. It showed that in an emergency Commons debate last night.

Why? Paris and Berlin are pushing for Lisbon treaty revisions to shore up the financial system. The Strasbourg parliament wants a bigger EU budget, and David Cameron finds himself on the back foot over both issues as he heads into today's Brussels summit. Continue reading...

Lord Pearson, the outgoing Ukip leader. Photograph: Ian Nicholson/PA

British public life is the poorer today in consequence of the resignation of Lord Pearson of Rannoch as leader of the UK Independence party. There has been something both engaging and dotty about his career – which made him the perfect man to lead Ukip in an appropriately ineffectual way.

PG Wodehouse would have loved him, and could not have invented a character so wacky and wayward as Pearson's joint deputy, Viscount Monckton, who is currently being hounded by the House of Lords for claiming to be a member – which he never has been. They are both Thatcherites run to seed.

Unfortunately for those of us who enjoyed Pearson's accident-orientated year as leader and felt it was the best possible solution to the Ukip question, he seems to have noticed his own unsuitability too. Hence this morning's statement that he is not best equipped to handle this leadership lark.

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David Cameron prepares for a fight with France and Germany over Turkey's admission to the EU. Photograph: Pool/REUTERS

The European Union has perfected the art in recent years of offending Turkey.

I remember a miserable evening in Luxembourg in 2005, during the British presidency of the EU, when formal membership negotiations with Turkey were meant to open. A predictable snag within the EU meant that foreign ministers, under the chairmanship of Jack Straw, could not confirm that the talks would actually begin.

Abdullah Gul, then the Turkish foreign minister who is now the country's president, is no fool. And so he told the foreign ministers that he would not sit in a hotel room in Luxembourg while the EU foreign ministers worked through their differences. Continue reading...

David Cameron, pictured with Angela Merkel in Berlin, has embarked on a rapprochement with the EU. Photograph: Carsten Koall/Getty Images

Did Peter Mandelson play cupid for David and Angela?

It is well known that Angela Merkel, the German chancellor, was deeply upset when David Cameron abandoned the main centre right grouping in the European Parliament.

Word went out that Merkel wanted to sever ties as a sign of her displeasure. That never quite happened, leading Tories to believe that Merkel realised she would always have to keep lines open to a future British prime minister.

But now we learn that there was an unsung hero who ensured that Angela and David hit it off the moment he entered No 10. Yes Peter Mandelson, patriot and pro-European, made sure that Angela never gave up on David.

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Samantha Cameron with a Madame Tussauds waxwork of her husband David today. Photograph: Rex Features

Hélène Mulholland with all today's politics news as it happened, including Nick Clegg's appeal to the public to nominate laws to be repealed, and William Hague's attempt to increase UK influence in the EU

David Cameron in Brussels last week. Photograph: Julien Warnand/EPA

While we're waiting for George Osborne's budget let's look on the bright side over the coalition and Europe. It's usually the sensible thing to do, as Esther Rantzen points out in a different context today – it's her 70th birthday – in the Daily Mail.

Happy birthday, Esther, and well done David Cameron over your handling of the sensitive T-word at last weekend's European council – or summit as we used to call them when they mattered more. If the chancellor is half as calm at 12.30 we will all sleep more soundly.

After his trip to Brussels – no more gallivanting to Corfu or Cannes for the summer summit, alas – Cameron reported to MPs yesterday in a tone that seems not to have outraged his Eurosceptics or sent the Mail editor's blood pressure in a northerly direction.

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David Cameron walks with European Commission president José Manuel Barroso to the EU summit in Brussels. Photograph: Virginia Mayo/AP

As an avid Anglophile, the European commission president, José Manuel Barroso, is clearly aware of the old English saying that the way to a man's heart is through his stomach.

Barroso laid on a full English breakfast this morning for David Cameron when Cameron paid his first visit as prime minister to the Berlaymont headquarters of the European commission in Brussels. Over scrambled eggs and bacon (though no beans) in his top floor dining room, Barroso told Cameron that he was administering "exactly the right medicine" to tackle Britain's record fiscal deficit.

This – and Barroso's declaration that the EU should focus on promoting economic growth rather than building up its institutions – was hailed by Cameron as "music to my ears".

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David Cameron and the European commission president José Manuel Barroso in Brussels. Photograph: Georges Gobet/AFP/Getty Images

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Chris Patten believes David Cameron will return to the mainstream centre right in the European parliament. Photograph: Eamonn McCabe

From the Olympian heights of the chancellorship of Oxford university, Lord (Chris) Patten makes public pronouncements with care these days.

So the coalition government will note with interest an intervention this weekend by the former Tory chairman on his favourite subject – Europe.

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