Prime Minister David Cameron is in a pickle. A vote Wednesday by rebels in Parliament, although nonbinding, called for him to demand a reduction in the European Union’s (EU) budget instead of the budget freeze he had intended to push. Opposition to such a freeze and to Britain’s joining a eurozone banking union could cost the City of London, its financial heart, its position at the top of the world’s financial centers.
Bloomberg reported Thursday that the vote defeat, the worst that Cameron has suffered, caused senior ministers in the government to warn Tories—who teamed up with the Labour Party for the vote—that their euroskeptic attitudes could cost them more than they know.
While those opposed to the EU insist Britain should demand that the EU cut its budget, the form of their opposition, said officials, threatens Cameron’s ability to make a deal at the EU summit meeting scheduled for later this month.
Since Cameron also planned to push for London’s continued financial autonomy while at the same time threatening to exercise Britain’s veto against the budget unless the country gets “a good deal” at the meeting, the City could find itself left out in the cold as his leverage vanishes.