Conservative party

The Tory party may not like it, but David Cameron is now finally following a sensible EU policy. As today's summit in Brussels starts, the Prime Minister appears to have decided what really matters to the UK, and realised that he needs to play nice with the Germans and French. At the top of the PM's priority list — a priority voiced by Michael Howard on the Today Programme earlier — is avoiding the collapse of the euro. The consequences of a collapse on Britain's economy are incalculable, but everyone knows they would be profound. Second comes the protection of the City. A Euroland tax on financial transactions would damage the City and thus Britain (as well as the EU) — avoiding it is key.

Ed Miliband had an open goal today. And he whacked it straight over the bar. Cameron was in trouble from the start. Having placated the rebel wing of his party with vague talk about ‘repatriating powers’ he is now expected to deliver. But he can’t make specific demands without weakening his hand at the negotiations so he has to talk in generalities. The Labour leader spotted this weakness and tried to exploit it with one of his lethally brief questions. ‘What powers would the Prime Minister repatriate?’ Cameron gave several answers without addressing the issue. His aim in the negotiations, he said, was to resolve the eurozone crisis, ‘and that means countries coming together and doing more things together.

David Cameron’s European problems seem to be mounting. The usual suspects — Carswell, Redwood, Jenkin et al — have been only too happy to take the airwaves and talk of this ‘great opportunity’ to repatriate powers. Those sentiments are growing across the backbenches. The Guardian quotes an ally of Iain Duncan Smith saying that he and his friends ‘do not accept the prime minister's argument that the changes will only affect the eurozone. Of course the changes will have an impact on Britain.’ The mounting disquiet appears to have been created, to an extent, by the PM hedging his bets and lowering expectations.

Earlier this morning, Number 10 briefed that fiscal union in the eurozone would not trigger a referendum in this country because sovereignty will not be transfered from London to Brussels — a pre-requisite for any vote. The problem for Cameron is that some of his backbenchers say there should be a referendum. Bernard Jenkin was on the Daily Politics earlier, insisting that fiscal integration marks a new era in the history of the Eurozone, which he dubbed ‘Maastricht Plus’. On the other hand, some eurosceptic backbenchers caution that now is not the time to hold a referendum — stability in the eurozone is the order of the day.

One of the advantages the governing party has during an election campaign is the ability to set the baseline. It is your plans which every other parties’ are measured against. So, if they plan extra spending you can accuse them of a ‘tax bombshell’ or if they want to spend less than you, then you can say they want ‘savage cuts.’ After Tuesday’s autumn statement, Treasury sources were adamant that there would be a spending review before the end of this parliament setting out the cuts the coalition would make to meet its fiscal mandate. Danny Alexander confirmed on Newsnight that these would be jointly-agreed coalition cuts.

In some ways, George Osborne will always be haunted by his 2007 Tory conference speech. That speech and the reaction to his commitment to raise all estates worth less than £1 million out of inheritance tax contributed to Gordon Brown not calling an early election. It has a claim to be one of the most important speeches in modern British politics — it is certainly the one that saved the Cameron project. But it has also created an expectation that Osborne has a set of aces up his sleeve every time he stands up to give a big speech. Tomorrow’s speech won’t see the Chancellor pull out any unexpected trumps.

Nick Clegg’s interview in The Observer today highlights what is fast becoming one of the biggest tensions in the coalition: the Lib Dem desire to show that they are the governing party who cares. Allies of Iain Duncan Smith have been infuriated by Lib Dem suggestions that the government would be doing little about youth unemployment if it was not for them. But Clegg repeats the claim to The Observer: ‘Whether it's on youth unemployment, whether it's on youngsters, whether it's on getting behind advanced manufacturing and not putting all our eggs into the City of London basket, I don't think that would have happened without the coalition.

A quick post just to add the Guardian's interview with David Cameron to your Saturday reading list. It takes the unusual approach of fielding questions to the PM from a range of ‘public figures’ — and, although many of those questions reduce down to ‘why aren't you giving more money to X?’, the results are still generally engaging and occasionally insightful. And so we learn, after an enquiry by The Spectator's own Toby Young, that Cameron doesn't keep a diary. And we also have the PM justifiying his stance on Europe to Nigel Farage; skipping over a question about what he may or may not have inhaled during his time at Eton; claiming that ‘not everything [Gordon Brown] did was wrong’; and more besides.

Political debate is going to be dominated by the economy between now and the autumn statement. Ed Miliband is trying to use this moment to persuade the public that the Coalition's economic policies have failed. By contrast, the Tories want to highlight how much deeper trouble the country would be in if it did not have the confidence of the bond markets. The Tories hope that this 'stay close to nurse for fear of something worse' approach will eventually deliver an election victory for them in 2015, given how hard Labour is finding it to regain credibility on the economy. As Ben Brogan wrote the other day, this strategy worked for them in 1992 — the campaign on which both Cameron and Hilton cut their political teeth.