Yesterday, the British coalition government (Conservatives and Liberal Democrats) suffered a major defeat in the House of Commons at the hands of some 50 Conservative rebels who want David Cameron, the Prime Minister, to veto any increase in the EU budget. The tone-deaf eurocrats in Brussels are demanding a 6.8 percent increase in the EU budget for 2013. All the while, most European governments are sinking deeper in the red. Quelle surprise!

Cameron has already promised to veto any spending increase above the inflation rate of 2.5 percent, but the Tory rebels demand that spending be frozen at the current level, which would amount to a cut in real spending. So, what now?

Cameron can ignore the non-binding parliamentary vote, but he was put on notice to take a hard line in Brussels. Most Tories realize that a cut in real spending is probably too much to hope for, but Cameron would do himself irreparable harm if he agreed to anything above a nominal increase. Some countries will not be pleased with the British stance and Cameron may yet have to veto the entire EU budget. It is impossible to ignore the growing euro-skepticism in Britain. Only last week, Theresa May, the Home Secretary, announced that Britain was withdrawing from some 130 EU-wide agreements in police and justice measures. Where is all of this heading? At present, it is not possible to tell whether the UK withdraws from the EU altogether or negotiates some sort of a looser membership agreement with the EU. One thing is clear, though: Europe’s troubles are far from over.