David Cameron today urged EU leaders to avoid a damaging row over new budget rules and instead focus on tackling Europe's economic crisis.
At his first EU summit, the Prime Minister called for a renewed push for growth and to tackle growing debt rather than institutional changes proposed by German chancellor Angela Merkel and EU president Herman Van Rompuy.
Mr Cameron, who had arrived at the summit building in Brussels with European Commission president Jose Manuel Barroso, said he would defend Britain's "red lines" in negotiations on the response to the economic turmoil and regulation of the City.
He has already vowed to oppose moves to force countries to share budget details with the Commission before their own parliaments. British diplomats are also wary that French president Nicolas Sarkozy could launch a fresh onslaught against the City.
Mr Barroso said the EU should focus on "substance" to boost confidence among consumers and investors. He added: "I want to pay tribute to the efforts that the UK Government coalition is taking. We believe they are exactly taking the right medicine for the situation."
The summit is being held amid continuing efforts to restore the credibility and stability of the euro, growing worries over the state of Spain's economy and governments bringing in deeply unpopular austerity measures that are slashing public spending and raising retirement ages.
Final decisions on the "peer review" of budgets and sanctions package are due to be taken in October, but the British delegation has been seeking to negotiate clauses in the summit conclusions which would significantly limit their impact on the UK.
On reforming financial markets, Mr Barroso said: "We want strong financial centres in Europe, including, of course, in London. We want open financial markets and competition, but it must be responsible, transparent, fact-based. That is why we need effective supervision and sensible regulation. I hope that today's summit will give a real push to agreement on our timetable of reform."
Mr Cameron held bilateral meetings with Ms Merkel and Dutch Prime Minister Jan Peter Balkende this morning. The summit was also expected to agree tough language on sanctions against Iran.
