LONDON/BRUSSELS (Reuters) – Prime Minister David Cameron has made history by blocking EU treaty change in a move that has isolated Britain and this detachment will define the next chapter in this island nation’s notoriously tricky relations with continental Europe.

Cameron, who styles himself a “eurosceptic,” seems to have pushed Britain further from the heart of Europe than even “Iron Lady” Margaret Thatcher dared to do in her battles in the 1980s when she said “No, No, No” to Brussels increasing its powers.

The prime minister was left out in the cold in Brussels on Friday when France and Germany failed to give him the safeguards he wanted for the powerful City of London financial services industry, which accounts for 10 percent of economic output.

Cameron’s hard line may appease elements of his Conservative Party but is likely to open up a rift with his pro-Europe Liberal Democrat allies. It could also leave Britain at risk of being excluded from Brussels decisions that affect business across the nation.

“It is a black day for Britain and Europe,” Liberal Democrat Lord Oakeshott said. “We are now in the waiting room while critical decisions are being taken.”

Cameron’s tough talk, described by one senior diplomat as “clumsy,” is likely to give him short-term relief from the demands of a restive right wing of his Conservatives who have been clamoring for him to claw back powers from Brussels.

But they will be back for more, with some seeking nothing short of a complete exit.

LONDON (Reuters) – Prime Minister David Cameron has ratcheted up the rhetoric about protecting Britain’s interests but the need to shield a faltering economy from storms across the Channel will soften his negotiating stance at this week’s EU summit.

Cameron has to juggle the demands of a Eurosceptic wing of his centre-right Conservative party, who are baying for powers to be clawed back from Brussels, with the risk of obstructing a deal to rescue its biggest trading partner.

Speaking in parliament on Wednesday, Cameron said he would drive a hard bargain as other EU countries ramped up their demands for institutional change.

Reclaiming more power over the financial services sector, which makes up more than 10 percent of the British economy and employs more than one million people, was one area Cameron highlighted.

“It’s absolutely vital that we safeguard it (the financial services industry), Cameron told parliament.

“We do see it under continued regulatory attack from Brussels and I think there is an opportunity, particularly if there is a treaty at 27 (EU nations), to ensure some safeguards not just for that industry but to give us greater power and control in terms of regulation here in this House of Commons (lower house).”

However, with Britain’s economy flirting with renewed recession and the government committed to years of spending cuts, it looks like economic pragmatism will overshadow all.

LONDON (Reuters) – Proposed changes to the way the euro zone governs its fiscal policy do not require a referendum in Britain, which is in the EU but does not use the single currency, the government said on Monday.

European leaders are under pressure this week to deliver a lasting solution to the euro zone debt crisis, with proposals to create a closer fiscal union based on tougher economic policy rules at the heart of discussions ahead of a summit on Friday.

Under British law, the Conservative-Liberal Democrat coalition government is required to hold a referendum on any European Union changes that result in a big switch of power from London to Brussels.

“No one is proposing a significant transfer of power from the UK to the EU. No one has put that on the table and I don’t think it’s likely to be on the table,” Prime Minister David Cameron’s spokesman told reporters.

“What’s being talked about is a new set of rules for the euro zone and how those countries that are members of the euro zone organise themselves on fiscal policy. There’s no proposal on the table for a transfer of powers from the UK to Brussels.”

Some in the Conservative party, which has a strong eurosceptic wing, have called for a referendum even on changes that only affect the 17 nations which use the euro, arguing that the 10 non-euro nations could still be inadvertently affected.

Cameron himself has warned there is a risk that a closer-knit euro zone could pose problems for Europe’s single market in the future and analysts say the 17-strong bloc could vote as one to force through changes against the will of other EU members.

LONDON (Reuters) – Britain will need further austerity after the next election in 2015, the Labour party said on Thursday, warning that any future left-wing government would have to find new ways to redistribute wealth and help the poor.

Labour leader Ed Miliband, who has been sketching out a vision for Britain this year which he hopes will win back voters after the party lost power in 2010, said reform to a “responsible capitalism” would be vital for social justice.

“The fiscal challenges we face mean we need to find new ways of delivering social justice,” Miliband said in a speech in London. “The failure of the government’s austerity plan means that the next Labour government is likely to inherit a deficit that still needs to be reduced.”

“So even then resources will have to be focussed significantly on paying down that deficit.”

The focus of the Conservative-Liberal Democrat coalition government is to all but eliminate by 2015 a record budget deficit which topped 10 percent of national output, but a weak economy and rising unemployment have cast doubt on the plan.

Labour and some leading economists have argued that the government should soften its austerity plan to give Britain’s fragile economy room to breathe while the euro zone crisis plays out. Labour say the government’s plans will miss the target by about 100 billion pounds on current consensus growth forecasts.

Bank of England Governor Mervyn King, while supportive of the government’s fiscal policy, has warned that the economy could stagnate until mid-2012 and analysts expect unemployment to continue to rise.

LONDON, Nov 14 (Reuters) – Britain must remain part of the European Union to protect its economic interests but a post-crisis Europe must not turn into a rigid bloc with the power to hurt those on the periphery, British Prime Minister David Cameron said on Monday.

Cameron asked in a foreign policy speech to the Lord Mayor of London’s banquet: “What kind of Europe do we actually want?”.

“One with the flexibility of a network, not the rigidity of a bloc, whose institutions help by connecting and strengthening its members to thrive in a vibrant world, rather than holding them back,” he said.

The eurosceptic Conservative leader, prime minister in a coalition government with the smaller and europhile Liberal Democrats, wants to maintain Britain’s influence in Europe while also urging further integration in the euro zone as part of a solution to the debt crisis.

The government is worried, however, that a closer-knit euro zone could isolate non-euro nations in the EU and form a powerful voting bloc which could damage the interests of countries such as Britain and Sweden.

Although a more closely integrated euro zone, which potentially votes as one on Europe-wide issues, could have damaging long-term consequences for Britain, Cameron is urging the euro zone in that direction because the alternative – a break up of the monetary union – would be disastrous for Britain’s fragile economy.

Some European countries are calling for deeper euro zone fiscal integration to help deal with the financial crisis.

LONDON (Reuters) – A European financial transaction tax would be catastrophic for the continent without the participation of countries such as the United States and China, Chancellor George Osborne said on Monday.

European Union policymakers have suggested a tax on financial trading to raise cash for a range of areas from development to bailouts, but Britain has rejected the idea, to safeguard London’s position as a global centre of finance.

“Proposals for a Europe-only financial transactions tax are a bullet aimed at the heart of London,” Osborne said in article for the London Evening Standard newspaper. “The ideas of a tax on mobile financial transactions that did not include America or China would be economic suicide for Britain and for Europe.”

“The EU should be coming forward with new ideas to promote growth, not undermine it.”

Osborne said there were “more grounds for optimism” this week that the euro zone crisis might stabilise, but warned it was still the “most dangerous moment for the world economy since Lehman Brothers went down in the autumn of 2008.”

He urged Greece and Italy to show the world they could push through austerity measures and called on the euro zone to dramatically increase the firepower of its own bailout funds.

“The financial risks of standing behind their currency will ultimately be borne by euro zone citizens. The euro zone has the financial capacity to restore stability. They now need to deploy it without delay,” he said.

LONDON, Nov 14 (Reuters) – A European financial transaction tax would be catastrophic for the continent without the participation of countries such as the United States and China, British finance minister George Osborne said on Monday.

European Union policymakers have suggested a tax on financial trading to raise cash for a range of areas from development to bailouts, but Britain has rejected the idea, to safeguard London’s position as a global centre of finance.

“Proposals for a Europe-only financial transactions tax are a bullet aimed at the heart of London,” Osborne said in article for the London Evening Standard newspaper. “The ideas of a tax on mobile financial transactions that did not include America or China would be economic suicide for Britain and for Europe.”

“The EU should be coming forward with new ideas to promote growth, not undermine it.”

Osborne said there were “more grounds for optimism” this week that the euro zone crisis might stabilise, but warned it was still the “most dangerous moment for the world economy since Lehman Brothers went down in the autumn of 2008″.

He urged Greece and Italy to show the world they could push through austerity measures and called on the euro zone to dramatically increase the firepower of its own bailout funds.

“The financial risks of standing behind their currency will ultimately be borne by euro zone citizens. The euro zone has the financial capacity to restore stability. They now need to deploy it without delay,” he said.

CANNES, France, Nov 3 (Reuters) – G20 leaders meeting in southern France were finalising an action plan on Thursday to try and return the world economy to balanced growth and could also seek to ramp up the IMF’s resources to help countries rocked by economic shocks.

A draft communique seen by Reuters, dated Nov. 2, showed the Group of 20 major economies will agree to hold countries with big budget deficits to fiscal consolidation and those with trade surpluses to boost internal demand.

The plan includes a pledge by Italy to cut its debt and deficit, sources told Reuters, as the G20 tries to tackle the gaping imbalances that set the stage for the 2007-09 crisis and hold Europe to cleaning up its fiscal mess.

“Countries with excessive debt burdens should immediately start fiscal consolidation. Countries in the eurozone that are viewed by the markets as safe havens should support demand and thus facilitate the situation for their weaker partners,” Russian President Dmitry Medvedev said.

G20 leaders said the summit in the French Riviera resort of Cannes — which was dominated by the sudden prospect of Greece quitting the euro — broadly agreed that the IMF’s funds should be increased to send a message of confidence and give it the means to fight future crises.

British Finance Minister George Osborne said China was supportive and no dissenting voices had been raised in talks where the G20 has been under pressure to show the same decisiveness it did in agreeing measures to tackle the 2008 crisis.

“The international community has accepted that it needs to address the general global economic situation and there is a debate that has begun but not concluded on increasing resources to the IMF in the classic way,” Osborne said.

LONDON (Reuters) – Britain is pushing hard for more euro zone integration to stabilise the fracturing 17-nation bloc, knowing full well it may mean a weakened hand and damaging long-term consequences for European Union nations like itself outside the single currency.

Britain has had to fight hard to make itself heard in the euro zone crisis, quarrelling privately and publicly with Paris and Berlin to try to speed along a resolution to a crisis that threatens the British economy, as well as those of its European neighbours.

Prime Minister David Cameron heads to Cannes in France on Thursday hoping to persuade the rest of the G20 economic powers to explicitly tell the euro zone to get its house in order.

As one of the 10 EU nations that does not use the euro, and also not wanting to fund further bail outs, Britain has little influence in a crisis which will dictate its own fate.

Greater union within the euro zone is seen by London as the only logical long-term fix but officials acknowledge that would also risk marginalising Britain from European decision making and threaten its competitive advantage in crucial sectors.

“It’s Solomon’s choice — the choice between a euro zone that implodes, inflicting huge collateral damage on the UK and blowing apart the coalition government’s plans to go into the next election with a growing economy and stronger public finances,” said Philip Whyte, a senior research fellow at the Centre For European Reform think tank in London.

“Set against that, (there is) the longer term problem of a more tightly integrated euro zone resulting in growing British isolation in the European Union.”

LONDON (Reuters) – Britain is pushing hard for more euro zone integration to stabilize the fracturing 17-nation bloc, knowing full well it may mean a weakened hand and damaging long-term consequences for European Union nations like itself outside the single currency.

Britain has had to fight hard to make itself heard in the euro zone crisis, quarreling privately and publicly with Paris and Berlin to try to speed along a resolution to a crisis that threatens the British economy, as well as those of its European neighbors.

Prime Minister David Cameron heads to Cannes in France on Thursday hoping to persuade the rest of the G20 economic powers to explicitly tell the euro zone to get its house in order.

As one of the 10 EU nations that does not use the euro, and also not wanting to fund further bail outs, Britain has little influence in a crisis which will dictate its own fate.

Greater union within the euro zone is seen by London as the only logical long-term fix but officials acknowledge that would also risk marginalizing Britain from European decision making and threaten its competitive advantage in crucial sectors.

“It’s Solomon’s choice — the choice between a euro zone that implodes, inflicting huge collateral damage on the UK and blowing apart the coalition government’s plans to go into the next election with a growing economy and stronger public finances,” said Philip Whyte, a senior research fellow at the Center For European Reform think tank in London.

“Set against that, (there is) the longer term problem of a more tightly integrated euro zone resulting in growing British isolation in the European Union.”