Cameron remains locked in a lose-lose situation on the euro

The PM attempts to appease Eurosceptic MPs while retaining British influence in the EU. He cannot ha

It is obvious that the crisis engulfing the eurozone has serious ramifications for Britain. It has also placed David Cameron in a tight spot politically, as he struggles to balance the demands of vociferous Eurosceptic MPs and a Franco-German alliance willing to forge ahead without Britain if it needs to.

As he prepares to join the EU's other 26 heads of government to discuss plans to save the euro, Cameron has attempted to navigate these contesting demands and set out his position in an article in the Times (£).

There are two key points to take from this piece. Firstly, Cameron dismisses calls for a referendum on any treaty changes by reiterating that this law only applies in the case of powers being transferred from Britain to the EU. At the weekend, Iain Duncan Smith added to Cameron's headache when he suggested that it could, in fact, apply to any "major treaty change", such as that required for greater fiscal union. Cameron also states that his demands will remain "practical and focused", despite calls from his MPs to use the talks to renegotiate social and employment law.

But he does not disregard his party's Eurosceptic wing entirely. The second key point is a hardening of rhetoric and a pledge to protect Britain's interests. Cameron warns that his focused approach should not be mistaken "for any lack of steel", and says that safeguards for the City of London will be the price of his support for any changes:

Our colleagues in the EU need to know that we will not agree to a treaty change that fails to protect our interests.

Essentially, Cameron is caught between a rock and a hard place. If he wants to create a treaty for all 27 EU member states, he must strike a conciliatory tone in talks with the rest of the EU. If, however, he prioritises an aggressive defence of Britain's interests, the likelihood is that the 17 eurozone countries will breakaway and form a treaty amongst themselves. In his piece, he addresses this possibility, saying that a treaty of 17 "would need to make sure our interests are protected".But it is unrealistic to think that Britain will not lose influence in such a scenario. Quite simply, he can't have it both ways, as my colleague Rafael Behr argued last week:

It doesn't look as if Britain has much of a say anyway, and either outcome gives Cameron a headache. If he can persuade the European Council later this week that all 27 EU members should be working on a new treaty, he invites his backbenchers to present him with a shopping list of powers to repatriate during the talks. If he accepts that it should just be a 17-strong euro member treaty negotiation, he risks surrendering Britain's seat in a discussion that is plainly vital to our national economic interest. That process might still produce a document that has to be ratified by parliament. One way or another, the clamour for a referendum will grow.

Cameron writes that "our biggest national interest is that the eurozone sorts out its problems", but from his posturing, it appears that he is not fully committed to this and remains trapped in a lose-lose situation. On the same day as the Prime Minister ramps up the rhetoric, veteran pro-Europe Tory Ken Clarke has told the FT that Britain should be a constructive player in resolving this crisis, focussing on "how to maintain the financial stability of the western world", not trying to wring concessions from eurozone countries. Quite simply, France and Germany have bigger fish to fry as they try to save the single currency, and they will have no problem with acting without Britain.

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.