After Brussels, Cameron takes refuge in his country retreat

Two dinners, 24 hours apart, and the audiences could scarcely be more different.

As David Cameron sank into one of the outsized dining chairs around the table in the oak-panelled room in his country residence at Chequers on Friday night, the mood could hardly have been different from that 24 hours earlier in the utilitarian surroundings of the Justus Lipsius building in Brussels.

Thirty Conservative backbench MPs – including the arch-Eurosceptic Andrew Rosindell, but also the moderate rising star Jesse Norman – joined the Prime Minister for a supper of salmon, beef and red wine. The invitations had been sent out a week earlier, but the timing of the dinner was curious, suggesting that Mr Cameron always believed that the EU summit to reach a deal on solving the eurozone crisis would not stretch into the weekend. He, apparently, expected to walk away from Brussels with nothing.

Where, on Thursday, Mr Cameron ate mainly in silence bored by what he called the "blah blah blah" of technicalities as fellow EU leaders thrashed out the new treaty, the Prime Minister turned on his gregarious charm with his MPs, many of them potential troublemakers from the independent-minded 2010 intake. The PM had drunk only black coffee during the nine-hour summit dinner, refraining from alcohol while some other leaders "knocked it back", according to one observer. On Friday, in the cosy warmth of his Buckinghamshire dining room, the claret flowed. In Brussels, Nicolas Sarkozy had refused to shake Mr Cameron's hand, on camera, while he and Angela Merkel had shared an awkward lift ride at 5am as the summit ended.

At Chequers, Tory MPs, delighted that Mr Cameron had used Britain's veto for the first time to stand up to the German Chancellor and French President, cheered their leader. The Prime Minister cracked jokes about his handbagging of the Eurocrats, and everyone laughed.

It is clear where Mr Cameron felt more comfortable, and which group the Prime Minister had wanted to lavish attention on. In October, Conservative MPs had inflicted a humiliating Commons rebellion over an EU referendum. No 10 aides insisted that the Chequers supper was just a normal, regular event for backbenchers – but the truth is that he cannot risk losing their confidence, and now faces a difficult few months attempting to fend off calls for him to renegotiate powers from Brussels and call a referendum.

When the Prime Minister awoke in his countryside retreat yesterday morning, he will have been cheered by the headlines in The Sun – "Up Eurs" – and the Daily Mail – "The day he put Britain first"; less so by those in the centre-left press, and those on the Continent. Mr Cameron, aided by his closest tacticians George Osborne and Ed Llewellyn, had scored a significant political victory for his party at home.

But this could be a tactical, short-term triumph, which appeared to be unravelling last night, with Nick Clegg's fury at how Mr Cameron had failed to secure what seemed like an achievable diplomatic point in Brussels. There are also signs of a strategic failure, and the source for this failure must be traced back six years this month, to the point where he secured the Tory leadership.

Mr Cameron had won over MPs on the right of his party, who had backed Liam Fox in the earlier stages of the leadership contest, with a promise to leave the European People's Party, the centre-right grouping in the European Parliament, and set up a new, more EU-sceptic body. At the time, this seemed like an easy promise. It certainly delivered him a victory over his rival David Davis. In 2009, however, a year before the 2010 election, it became clear that the only other parties the Conservatives could join up with were right-wing Czech and Polish parties whose members had questionable records on anti-Semitism and homophobia. More importantly, Mr Cameron was deserting the EPP, whose members included Chancellor Merkel and President Sarkozy, and with it the chance for extra "face time" with the two leading drivers of reform in Europe. It is an interesting question as to whether Mr Cameron could have helped to shape the opinion of Mrs Merkel and Mr Sarkozy – but he certainly would have enjoyed a greater degree of closeness to them that was clearly lacking on Thursday.

To illustrate this, the EPP held its annual congress in the southern French port of Marseille on Wednesday and Thursday, on the eve of the summit. Not only were the French and German leaders present but also the European Commission head, Jose Manuel Barroso. On Wednesday evening, Mrs Merkel took a telephone call from US President Barack Obama, specifically to discuss the summit that was happening in Brussels the next day. Would it, diplomats and observers are asking this weekend, have made a difference if Mr Cameron had enjoyed a glass of champagne with the German Chancellor later that evening?

The shadow Foreign Secretary, Douglas Alexander, who has friends in the diplomatic service from his time as Europe minister, said: "The roots of Cameron's fateful decision on Thursday lie deep in his failure to fully modernise the Conservative Party. To secure the leadership he promised to take his party out of the EPP and ever since he has been following his party, not leading it. The idea that any point in the foreseeable future that there is any goodwill to the British Prime Minister to allow any repatriation of powers is risible.

"If you are driving looking over your right shoulder, eventually you are going to drive the car into a wall. That's what David Cameron did on Thursday night."

When he became Prime Minister 18 months ago, many – especially those in the Foreign Office – were braced for the new, Conservative-led, more Eurosceptic coalition government. But there was pleasant surprise: William Hague, who pinned the 2001 Tory election campaign on keeping the pound, adopted a more "realist" posture, say those in Whitehall. But there was still the sense that the new British Government was not doing enough work with its French and German counterparts. There was the famous joke by Mr Osborne about the French President's height, when he removed a stool from behind a lectern at a Spectator event, claiming it was for the 5ft 5in Mr Sarkozy. He lodged a formal complaint, and none of this helped wider Continental relations. A furious Lib Dem member of the Government said last night: "We are paying the price of several years, certainly 18 months, of cocking a snook at the rest of Europe. That's the reason they are angry and they have got their own back."

At the same time, Mr Cameron has been under pressure from the right wing of his party to do more for its cause. The 81-strong rebellion in October came after months of apparent capitulation to the Lib Dem wing of the coalition. The Commons revolt gave Mr Cameron a hint of what was to come, should he continue to resist their demands on Europe, the biggest issue to strike fear in the heart of a Conservative leader.

So, it seems, the plan was to go into Thursday's summit with something that would delight the right-wing MPs, while appearing "reasonable" enough for coalition unity and support. But the plan itself had to be kept under wraps, sources suggest, in case it leaked out beforehand and Tory MPs demanded more.

At the same time, the coalition had to remain united. In the weeks before the summit, Nick Clegg and Mr Cameron were said to have launched a bout of "tag-team telephone diplomacy", though it appears the multilingual Lib Dem was more enthusiastic about picking up the receiver. He is thought to have put his language skills to good use speaking to counterparts in Spain, Holland and Finland. But aides admit it was too little, too late. "Some leg work was done ... clearly not enough."

One person who they failed to win over was Vince Cable, the Business Secretary, and, along with Chris Huhne, one of the more rebellious Lib Dem members of the Cabinet. It is understood Mr Cable raised his concerns with colleagues that too much weight was being placed on protecting the City of London at the expense of the rest of the British economy. There is no suggestion that Mr Cable will resign over this issue, but friends say this is a significant setback in the harmony of the coalition.

Having packed the PM off with the agreed British position – no repatriation of powers, asking only for "moderate and necessary safeguards" – Mr Clegg was confident an agreement could be reached. But he was in the dark about Mr Cameron's strategy of springing the British document on fellow countries at the last minute.

George Osborne declared on Wednesday that Britain's preference was for a treaty of 27 rather than 17 – one that had legitimacy, with all EU nations taking part, but did not involve the transfer of powers from Britain to Brussels that would trigger a referendum back home. Yet no one was clear what was in the British proposals. For Mr Osborne, a brilliant political tactician and "war gamer", this seemed the perfect plan.

The Prime Minister, who had flown into Brussels on Thursday afternoon after watching his son, Elwen, play a mouse in his school nativity play, went straight into a meeting with Mr Sarkozy and Mrs Merkel ahead of the dinner at 8.10pm. It was during this 45-minute meeting that Mr Cameron first outlined his demands.

According to sources, Mr Sarkozy and Mrs Merkel seemed surprised by the scale of the safeguards he sought – effectively blanket protection for the City of London from any EU regulation – and British officials realised the formal summit was going to be "very difficult". One EU diplomat said: "The writing was on the wall. Cameron overbid. What he wanted was never going to happen."

Another added: "Everyone round the table was mystified. They were all asking the same question: what does Cameron get out of this?"

One safeguard demanded by Mr Cameron concerned the implementation of the Vickers report to reform Britain's banks. In particular, it is understood that Mr Sarkozy wanted to impose a cap on the level of capital that banks could hold which was less than the minimum 10 per cent level recommended by Vickers to protect banks from future shocks.

Crucially, Mr Cameron was alone in the room, save for the advice of his closest aides and EU advisers on the end of a BlackBerry email. The group consisted of Sir Jon Cunliffe, his EU adviser, who will soon become head of UK representation in Brussels, John Casson, the PM's private secretary on foreign affairs, Ed Llewellyn, his chief of staff with a specialist foreign affairs background, and his press secretary, Gabby Bertin. As the meeting dragged on into the early hours of the morning, even the Prime Minister's famed quick feet seemed to stumble.

One familiar with how events unfolded on Thursday evening said: "Cameron started off the supper harping on about financial regulation which got everybody's backs up." But a No 10 aide defended the strategy. "We were always going to offer something reasonable. We didn't go in with a huge list of demands. We were very reasonable and are confident of our reasonableness. They were simply not prepared to budge. We have to achieve these safeguards if there was going to be any treaty. If that hadn't happened without safeguards it would have been really dangerous for us."

The meeting finally ended shortly after 5am. Mr Cameron, who had failed to get any backing for his demands to protect the City, had used his veto to oppose a new "compact" involving 17 eurozone countries, plus six nations with aspirations to join the single currency, although three other countries would later follow suit. As the French leader hurried to call a press conference to announce a deal had been reached, the PM called Mr Clegg. Nothing could prepare him for the bombshell from the PM declaring he had walked away from the other 26 member states. As Mr Cameron hung up to prepare for his press conference, the scale of the error dawned on his deputy.

"Diplomacy requires experience and judgement at critical moments," said a senior Lib Dem source. "It also requires allies and good chemistry which can only be built over time. Clearly this is not a skill that the Conservatives have as yet acquired."

At 11.30am on Friday, Mr Clegg issued a statement which expressed "regret that last night it proved to be impossible to find a way forward". The unspoken implication was that his boss was to blame. But as excited Tory right-wingers lined up in the TV studios to declare the outcome a historic victory for Britain, a frustrated Mr Clegg went further in a recorded film clip to slap down "Eurosceptics who might be rubbing their hands in glee about the outcome of the summit". In a series of calls with Mr Cameron in the past 48 hours, he has made clear his concern that the result could be devastating for Britain.

But a No 10 aide said defiantly: "People say he was isolated, and yes he was isolated, and that is a good thing. There is a reason why we are not in the euro. But we are not outside the 26. We will still go to European Council. It is a complete myth that things have changed."

Mr Cameron may be happy to be isolated in Europe, but there is also a possibility that his behaviour in Brussels will go down badly in Washington. US input into the saga could unnerve Downing Street. It is in the US's interests for the euro to be shored up. The White House pointedly refused to comment on the veto, but stressed EU leaders must "act conclusively and decisively to resolve" the crisis.

What happens next? The EU negotiations are not over. Between now and the next round of negotiations in March, the Tory right will demand more defiance from their Prime Minister. At the same time, a furious Mr Clegg and his Lib Dem cabinet colleagues will attempt to drag Mr Cameron in the opposite direction, and save some of Britain's reputation in Europe. On the Continent, there is a lot of anxiety, tension and anger towards Mr Cameron. Le Monde's editorial yesterday said: "Maybe it is time for Britain to get out. Why should they have a commissioner? Why should they have a say?"

As one Lib Dem government member pointed out, if the euro collapses, the events of Thursday will be irrelevant. But if the eurozone stabilises, the focus in Britain will swing back to the tensions in the coalition. A referendum would break it apart. The Lib Dem source said: "All of this could be yesterday's news depending on what happens to the eurozone. If the eurozone does manage to get back on its feet, then our predicament will be very serious indeed." And for Mr Cameron, there will be no retreat to the fireside comfort of Chequers.

Press verdict: How the papers reacted to the UK's veto

Germany

Heilbronner Stimme

"Britain decouples from Europe," it said, with a picture of a British carriage separating from the European train.

France

Le Monde

"Great Britain isolated like never before," it said. "Britain ... does not believe in the European idea."

Spain

El Pais

"The crisis serves to weaken a prime minister who does not have the full support of his own party due to the rise of Eurosceptics."

UK

The sun "Up Eurs" it said yesterday. "Bulldog PM sticks up for Britain." It speculated on what may follow Cameron antagonising his EU peers.

Daily Mail "The day he put Britain first", it said, above a picture of Cameron. Against angry Eurocrats, he "defended British interests".

Daily Telegraph "Cameron stands as the lone man of Europe," it said. It was a move back to "splendid isolation" in Europe.

Shades of blue: Six Tories to watch on EU relations

Andrew Rosindell

Dressed his bull terrier in a Union Jack waistcoat in the 2005 election. As international director of the highly Eurosceptic European Foundation, he urged Cameron, pre-summit, to show some "bulldog spirit" in Brussels.

Swivel-eyed rating: 5/5

Bill Cash

Grand old man of Tory Euroscepticism, who cut his teeth as ringleader of the Maastricht treaty revolt that almost unseated John Major. Founded the European Foundation in 1993. Certain to pounce on the latest twist to press the case for change.

Swivel-eyed rating: 4/5

Chris Heaton-Harris

Still a Eurosceptic, but the former MEP realises the value of EU links and avoids intemperate criticism. Angered ardent Eurosceptics in May with a watered-down motion supportive of Cameron before an EU summit on bailouts.

Swivel-eyed rating: 2/5

George Eustice

Former campaign director for the anti-euro "No" campaign and Ukip candidate, he's a moderate who once stood for the European Parliament. Keen to protect the City in the face of closer eurozone co-operation. Experience as Cameron aide will ensure loyalty.

Swivel-eyed rating: 2/5

Ken Clarke

Bogeyman of the Eurosceptic extremists, he has defied anti-Europe rhetoric since helping Ted Heath win key votes on entry to the EEC. Now President of the Conservative Europe Group. Cool response to Cameron veto underlines his lingering threat to stability.

Swivel-eyed rating: 1/5

Lord (Chris) Patten

Urbane, sensible, Europhile Tory, and former European commissioner who shuns Clarke's combative approach to Eurosceptics. Service in Brussels and Hong Kong has given him a more rounded world-view than many of his colleagues.

Swivel-eyed rating: 0/5

The need to spend a penny: When the call of duty trumps the call of nature

If David Cameron showed any sign of discomfort as he sat around the table with fellow EU leaders on Thursday night, the cause may not have been only an increasing feeling of isolation: a source revealed that the Prime Minister was “desperate for a pee” during the marathon dinner summit in the Justus Lipsius building in Brussels.

It is understood that Mr Cameron used his full bladder as a device to keep him focused for the nine-hour session. It’s not the first time the PM has used this rather unorthodox method. He did the same thing when he delivered his “no-notes” make-or-break speech to his party conference in 2007, which stopped Gordon Brown from calling a snap election and saved his own leadership.

He picked up the technique from watching a documentary that the BBC’s Michael Cockerell had made 10 years earlier about Enoch Powell. The veteran broadcaster wrote: “I said to Powell that I had heard he always liked to make a big speech on a full bladder. ‘Absolutely,’ he replied, ‘you should do nothing to decrease the tension before making a big speech. If anything you should seek to increase it.’”

Other public figures have adopted their own methods. Alastair Campbell used a bent-open paper-clip to prick his hand while giving evidence to the Foreign Affairs select committee over the David Kelly affair in 2003. And David Dimbleby hums to himself before he goes on air to stretch his vocal cords.

Jane Merrick