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Coalition tensions over Europe are again threatening to be the story this morning. Nick Clegg has told The Guardian's Patrick Wintour that Britain has 'signalled we are happy for them [the Eurozone plus group of countries] to use EU institutions' to enforce any new treaty they agree between themselves. This is a striking claim given that David Cameron has not publicly said that he would accept this. If the Deputy Prime Minister's summary of the coalition position is accurate, then Cameron will face criticism from eurosceptics that he is backsliding on his veto. But for all Clegg's criticism of Cameron handling off the summit, he remains unconvinced by the plans that the eurozone plus countries are now pursuing.

What are the Lib Dems up to? On Tuesday, Clegg, Cable, Alexander, Huhne and Laws met with 'Business for New Europe', a group of pro-European business leaders, in what the FT describes as as 'a very public display of engagement with business over Europe' and the front page of today's Mail calls 'plotting to rally business chiefs against Cameron over Europe'. It is, of course, not surprising to see senior Liberal Democrats talking to pro-EU business people and advocating more engagement with Europe. But it does highlight what will be a key goal of the Lib Dem leadership over the next few months: building bridges with Europe, particularly to reconnect with traditional, europhile Lib Dem supporters following the PM's veto last week.

The Times has a very interesting story (£) today on page 17. It claims that David Cameron had agreed to inform Nick Clegg if it appeared that Britain was going to be isolated at last week’s European Council. The significance of this is that it suggests that the Lib Dems believed they would be consulted before the government vetoed anything. This news emerges after senior Liberal Democrats have privately questioned why their leader did not insist that Cameron only use the veto once he had Clegg’s explicit agreement. The Times also reports that this negotiating protocol did not envisage a situation where Britain was left in a minority of only a couple of countries.

As the effects of last week's European Council become clear, debate about the rights and wrongs of David Cameron's diplomacy hinge on one question: were his demands ‘reasonable and modestly expressed’, as a source in No 10 put it to me? Everyone knows that there were chronic failures in the run-up to the meeting itself. I laid a few of them out in an earlier post, but, basically, they amount to a failure of prioritisation: the UK eroded the goodwill it needed by fighting tooth-and-nail on every issue beforehand, thereby blocking things that other EU states care about but which are not important, except symbolically, to the British. International — and especially European — cooperation is about give-and-take. It cannot just be take.

Today was one of those days when we saw just how divisive the European issue can be to the Conservative party. The sight of Malcolm Rifkind and Nadine Dorries treating each other with barely disguised contempt on Newsnight was a sign of just how poisonous relations in the parliamentary party could become. Intriguingly, the Daily Mail reports in its first edition that ‘Even some of Mr Cameron’s closest Cabinet allies are understood to be shifting to a much more Eurosceptic position, with a five-strong group of ministers planning to visit the Prime Minister as early as today to urge him to toughen his stance.

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.

There probably hasn't been a meeting of European finance ministers as important as the one tonight. The euro is still at risk; with new governments in Spain, Italy, and Greece incapable of calming the markets, and Angela Merkel unwilling to let the ECB act. In a speech in Berlin, Polish foreign minister Radek Sikorski put it clearly: ‘I fear German power less than I am beginning to fear German inactivity.’ It is a fear shared in London and Paris as well. The 17 finance ministers will discuss the range of options on the table: from setting up an EU Treasury to the possibility of eurobonds or establishing a supra-national process to monitor national budgets.

There's just over a week to go until the crunch EU summit on 8-9 December, so David Cameron has to decide how best to play his cards — and quick. The problem, as Daniel Korski has pointed out, is that Britain faces the risk of ‘structural isolation’ in Europe in the short-term. To counter this, Cameron effectively has two options. First, work with allies on both sides of the euro divide to seek political assurances — formal or informal — against the formation of a two-tier Europe with a more integrated eurozone in the driving seat. Or, second, press ahead with UK-specific carve-outs from the EU structure.