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David Cameron’s New Year interview on Marr was dominated not by the economy but by Europe. In a sign of what the promise of a speech setting out his European strategy has started, Cameron was repeatedly asked about what powers he would like back. He didn’t give much away, repeatedly telling Andrew Marr he would have to wait for the speech later this month. But two interesting things did emerge. First, Cameron indicated that he wanted to toughen up the way that the free movement of people is applied. I presume this means that only those with work or a clear means of support could come here; Nick Boles and others have long argued that this is possible under the existing treaties. Second, Cameron indicated that the new terms-or-out referendum would take place within five years.

Here is a story that should have got far more attention. A story that perfectly epitomises the corruption and anti-democratic activity of the EU. In 2010 the group NGO Monitor – which seeks to hold NGOs to account – petitioned the European Commission to reveal details of the NGOs it has funded in recent years.  As readers will know, much of the government-funded NGO business is a racket, and one which pushes highly specific political agendas. And so it has been in recent years with funding from the EU. In particular, as NGO Monitor has previously shown, there is the little matter of the European Commission funding rabidly anti-Israel groups in Europe and the Middle East.

Becoming a 'second-class' member of the European Union doesn't sound awfully appealing on first glance at today's Times story. But the 'associate membership' being considered by the Union of European Federalists would see Britain remain in the single market but lose its commissioner in Brussels and eventually its MEPs, too. Those drawing up this version of the new treaty also envisage that there would continue to be a seat at the Court of Justice for Britain.

Nick Clegg has made a not-so-startling intervention in the debate about Britain's relationship with Europe today, warning that Britain must avoid selling itself short in a renegotiation. His interview with the Guardian is a necessary piece of positioning ahead of David Cameron's Big Europe Speech in mid-January, and this kind of differentiation is something the Tories are more than happy for the Lib Dem leader to continue doing. So in some ways, Clegg warning Cameron not to overdo it on Europe isn't at all significant. But the Deputy Prime Minister makes an important observation in his interview about Britain's bargaining power.

David Cameron's Conservative modernisation agenda is struggling. Several of today's front pages highlight how traditional Tory issues — immigration and family values — have returned to the centre stage. And many of Cameron's attempts to modernise his party on big issues (climate change, green energy, gay marriage, HS2) have met with a negative responses. How can he retool his modus operandi to win a Tory a majority at the next general election? Policing and ex-immigration minister Damian Green has a few suggestions. In a speech he will give to Bright Blue this evening, Green suggests Cameron's modernising agenda is not yet an ex-agenda, and can still be refashioned to work in 2015.

Today's Think Scotland column takes a gander at the rumpus over an independent Scotland's accession to the EU. Until recently the SNP promised that said accession would be automatic. Now it's simply "common-sense".  This is because Jose Manuel Barroso, the Spanish Iberian agent* at the heart of the EU Commission, has made an awkward intervention. Scotland would, he says, not be an automatic member of the club at all. Intuitively this is obvious just as Scotland would not be an automatic member of the United Nations. It would have to apply. Once it applied it's application would most probably be accepted. There are few plausible grounds upon which to reject it. With regard to Brussels, however, the truth is that no-one quite knows precisely what would happen.

Liam Fox sparked a row with a former diplomat today after accusing the Foreign Office of an institutional bias towards greater integration with the European Union. The former Defence Secretary is building up a reputation for himself as a rallying figure for the eurosceptic right wing of the Conservative party with a series of speeches on Britain's relationship with Europe, and today he attacked the civil service for having a weak spot for the continent. He told an Open Europe event at the Royal United Services Institute that the government's desire to renegotiate its EU position was impaired as a result of the FCO being 'totally wedded to the concept of ever-closer union, for whom integration into the EU is virtually an article of faith'.

Another day, another paper by a Tory MP about Britain's relationship with Europe. Except the latest paper, by Tobias Ellwood for think tank Open Europe, is actually not so much about what's wrong with Europe, but about what's wrong with how our Parliament in Westminster deals with the whole issue. Ellwood, who is PPS to Europe Minister David Lidington, doesn't believe Westminster politicians are actually very good at engaging with European Union policymaking, preferring instead a 'complain-but-don't-change' approach. He paints a discomfiting picture of the way MPs relate to Brussels, describing an alienation which leads to 'little appetite amongst MPs to understand fully how the EU actually works - and how to use Parliamentary power to change it or its policies'.

So, the EU budget summit has — as expected — broken up without agreement. We await the date of the next discussion of the matter. But for the moment it means there is nothing that David Cameron will have to try to pilot through parliament. Talking to those close to the Prime Minister, I sense that they are not unhappy with this conclusion. In Downing Street, they feel that their criticisms of the running costs of the EU bureaucracy have struck a chord with other contributor countries. They’re also pleased that Cameron has managed to strike a tough negotiating position without isolating himself. But what is giving them the greatest satisfaction is how solicitous of the British position Angela Merkel was. They regard this as a promising sign for the coming renegotiation.

Another day, another set of newspapers full to bursting with pieces about Britain’s fractious relationship with the European Union – all of which, in their way, will unnerve David Cameron. The most enjoyable read is Boris Johnson’s column the Telegraph. Boris made his name as the Telegraph’s European Community Correspondent in the late ‘80s and early ‘90s, writing amusing stories about the EC’s penchant for mad waste and corruption. He gives a reprise today, drawing attention to the fact that the EU distributes your money to Spanish sheep farmers who do not have any sheep. Boris’ conclusion is that David Cameron must go into this week’s debates armed with Maggie’s handbag and tell Brussels that enough is enough.

Are Britain and Germany heading for an almightily clash over the future of the EU? In this week's Spectator, Christopher Caldwell argues that Angela Merkel has had enough of Britain's position and is out to give David Cameron a kicking over Britain's lack of solidarity with her nation. On the latest View from 22 podcast, Fraser Nelson explains the significance of about is about to happen: 'The [problem is the] extent to which Europeans don't understand us, they can not get that for Britain, it is an issue of sovereignty. They keep thinking well the Brits don't want to agree the next budget, let's give them a few sweeteners — a subsidy here, a commissioner there. They are trying to horse trade with us, where for us now it's gone beyond that.

Even the cheapest, Poundland crystal ball will tell even a blind observer that Europe is pretty soon going to be a pretty hefty problem for almost all of Britain's political parties. Almost all, I say, because that includes the SNP* whose europhilia is, in some respects, a product of a time that no longer exists. Anyway, the odds of manifesto pledges promising an in-or-out referendum in the next parliament seem to be shortening all the time. I have no idea what this is supposed to achieve since, as best I understand the matter, neither the Conservative nor Labour parties wish Britain to leave the European Union. Asking the question necessarily increases the chances of receiving an answer you do not think sensible or in the national interest.

Will David Cameron be denied his veto moment after all? Brussels sources appear to think the European Union budget summit on 22 and 23 November could still be cancelled. A report from Italian wire service ANSA quotes one source saying 'everything indicates that it will be impossible to overcome the British veto' and that cancelling the summit remains an option. This follows reports recently that Angela Merkel was threatening to cancel the summit as it was pointless if Britain was going to veto any increase above one in line with inflation. The German Chancellor had a lengthy dinner with Cameron to discuss the summit on Wednesday night, but their talks haven't stopped the European rumour mill.

David Cameron and Angela Merkel are eating dinner together tonight, over which they will discuss the forthcoming European Budget summit. The discussion may make even the sweetest crème brûlée taste rather sour, with Cameron continuing to threaten to veto anything above a real-terms freeze in the budget. He has told reporters following him around on his tour of the Middle East that he will make the argument for a freeze 'with vigour'. As she arrives in Downing Street, Merkel will be mindful, though, that she has a key role in trying to reach a consensus between the British position and the desire of other countries in the union for more money.

Over the past two weeks, the government has been desperately trying to harden its position on the European Union to match public opinion. David Cameron has been rather bullish with his plans to opt out for 130 EU law-and-order measures and the veto threat over the budget, despite being outfoxed by both Labour and his backbenchers on the latter. Has it been successful? As Isabel reported yesterday, the voters of Corby, Witney and Doncaster North are not entirely happy with the Conservatives’ current position and new national polling reflects a similar attitude. This weekend’s YouGov poll compares public attitudes today towards the EU to this time last year.

With UKIP regularly challenging the Liberal Democrats for third place in the polls, the party is now beginning to be treated with the seriousness it deserves. In an interview on the Sunday Politics, Nigel Farage made his usual, spiky case for leaving the European Union. Farage argued that he wants a free-trade deal with the rest of the EU and that the other countries would agree because ‘they need us more than we need them’. Even if Farage is right on the numbers, there’s a major doubt if the rest of Europe would be inclined to cut a deal in the wake of a British exit: a country leaving and then prospering outside would be very damaging to the European project.

‘I thought it would hurt more than it did’ one loyalist minister remarked after last night’s government defeat on the EU budget. The fact that the vote isn’t going to bring the government down or bind its hands is what is consoling Cameron loyalists. They are also pointing out that the Eurosceptic vote split with Jacob Rees-Mogg, Priti Patel and Andrea Leadsom staying on the government side this time. But what should worry Number 10 about this rebellion is its flash mob nature. As Isabel pointed out last night, there wasn’t — unlike with the Lords revolt or the EU referendum vote — months of planning put into this one. Instead, it was a rebellion that flared up as soon as the amendment went down — gaining 24 supporters in the first 24 hours.