Who wins from David Cameron's veto - Britain or the EU?

So the Eurosceptics in David Cameron's Conservative Party finally have something to cheer about. Following a celebratory dinner at Chequers with the Prime Minister last weekend, Tory backbenchers and some Cabinet ministers feel the veto was the first step towards the United Kingdom eventually leaving the European Union. Meanwhile, the business world is not so happy with Cameron's idea of an early Christmas present. Director General of the influential Confederation of British Industry John Cridland warns: "Businesses want the recriminations to stop while the UK moves swiftly to secure our influence in the single market - 40 cent of our trade is with the eurozone economies and thousands of jobs depend on it. The coalition government must redouble its efforts to ensure that the UK is not put at an economic disadvantage."

The potential disadvantages are, in fact, already starting to emerge. Anti-Brit rhetoric has been ramped up to the point where many of our continental cousins are talking about marginalising the UK, regulatory recriminations against the city if London as a financial services hub and, even, cancelling the British rebate on the country's EU contribution. In addition, the United States is not at all impressed by the British isolationism. As Michael Leigh, a senior adviser at the German Marshall Fund think-tank, put it in an article for PublicServiceEurope.com: "From a transatlantic perspective, the US 'special relationship' with the UK today depends more on Britain's influence within Europe than upon supposed cultural affinities. This, too, is likely to suffer if Britain persists in relegating itself to the sidelines."

But despite Cameron's lack of effective negotiation with Nicolas Sarkozy and Angela Merkel – and the silly decision to have the debate at 2am when tempers were frayed, rather than returning the next day when minds were fresh and manners had returned – it is hard to see how the British PM could have accepted the deal on offer. Had he done so, the proposals would never have made it through parliament anyway. Really, this tipping point over Britain's relationship with the EU was bound to come. The real surprise is that it took so long. Whether Cameron is to benefit or lose out from the veto is yet to be decided, but what is not in doubt is that his political career will be defined by it.

Meanwhile, there are still hurdles to climb for the 26. Politicians in Ireland, the Czech Republic and Finland are already starting to flex their muscles over the potential loss of sovereignty. Back here in Blighty, leader of the British Labour MEPs Glenis Willmott quips: "Cameron might think he is Churchill. In fact, never in the history of negotiations with our European partners was so much sacrificed for so few by so many." Although, both Labour and the Liberal Democrats have not set out a realistic alternative. Ed Miliband and Nick Clegg glibly insist that their negotiating skills would have meant that they would not have got to the point of discussing a veto. A very weak argument, indeed.

Nevertheless - the magnitude of the snub towards the EU by the Albion is, perhaps, larger than Cameron himself had calculated when putting Sarkozy in his place at the summit. Director of foreign policy and defence at the Centre for European Reform think-tank Tomas Valasek points out that "Britain has become toxic by association" in Europe, meaning that "ideas which it sponsors will be resisted on principle, not on merit". He adds: "The UK veto played into Sarkozy's hands and cemented the dominant role of Germany and France in the new fiscal union, to the alarm of the central Europeans. Britain's actions have also shifted power in the EU from small to big states. The inner core will continue to shrink. France and Germany may try to expand the remit of the core group beyond issues such as national budgets and deficits to include taxes or labour standards." It seems that Cameron's veto may not only marginalise the UK, but also ensure that the EU widens and deepens as never before. Now, that is what you call an ironic twist.