Margareta Pagano: Gird your loins, Dave – or face a real EU car crash

My money is on Hilary Mantel winning the Booker Prize for her dazzling novel, Wolf Hall, which tells the story of how Henry VIII severed England's ties with Rome over his fateful marriage to Anne Boleyn, and which is stirring such controversy over the new light she throws on Sir Thomas Cromwell and Sir Thomas More.

It's not just the magnificence of her writing that makes the novel so great, but the insight she brings to 16th-century European political affairs and England's tortured relations with the Continent.

I'm not suggesting Brussels is the Rome of 400 years ago, but there's no doubt that England's politicians are as hopeless today at doing business with such important trading neighbours as they were in Tudor times.

For this reason alone, Wolf Hall should be on David Cameron's reading list as the Conservative leader's approach towards Europe looks set for another car crash, one of those spectacular smash-ups the Tories do so well. Cameron's decision last week to expel MEP Edward McMillan-Scott from the party because of his criticism of its alliances with some of Europe's most extreme right-wing parties is as despotic as any 16th-century cardinal's. It's true that doing deals with other European parties is the only way to do business in the EU, but I'm afraid Cameron has chosen the wrong alliance for all the wrong reasons.

He seems to have decided that the only way to deal with Europe is to avoid debate at any cost. This is a bad mistake, especially with the Irish vote on the Lisbon Treaty coming up on 2 October, and the promise of a referendum.

It's time for Cameron to be brave; we are grown-ups and should be able to cope with a bit of debate without fear of the Tower. What the Tories should do, is confound the sceptics, adopt a truly positive approach to the EU, appoint a strong shadow minister for Europe and make good alliances with other centrist parties. We are not the only country that wants to curb excessive regulation or reform the budget. And it's time we took a lead. Many recent EU directives could have been avoided if Britain's political class had taken a leading role in negotiations. The ridiculous dictat on hedge funds and private equity – which we all know will be changed – and the threat from competition rules faced by Lloyds and RBS if they don't divest might have been softened if our elected MEPs had more guts.

As Sir Stephen Wright, the head of International Financial Services, the City's promotional trade body, told me recently, the City's relations with the EU are bad because regulators and politicians alike have paid so little attention. He argues the UK could be so much more powerful if only it had a stronger voice. As a former ambassador to Spain, Wright has had a bird-eye's view; he should be listened to.

Whether Mantel wins the Booker or not, her novel is the best contribution I've yet read in our contemporary debate over Europe. I leave the historians to argue over whether her spin on Cromwell and More is accurate, but the way she has painted England's fractured diplomacy with the Continent is a cautionary tale for our political masters – present and future.

Alive and kicking - Shoes trample over all expections

Trust the TUC to attack one of the few industries which is doing well in our tough times, providing jobs as well as thrills. Just as the unions came out with their damning indictment of high heels came the news from Next and Debenhams that women just can't stop buying shoes, the higher the better. I thought Debenhams deputy chief executive put it rather well when he said: "Girls are incapable of stopping themselves buying shoes." The two retailers are now frantically expanding their footwear departments to sell as many of the neon-coloured, bondage, peep-toe shoe boots with heels as they can – the more outrageous the better. This recession really is prompting the oddest changes in behaviour – at Kingfisher, the owner of B&Q, buyers are now stocking up on sties for pigs following the big rise in chicken coop sales. Women collecting eggs had better watch their steps.

LSE shares are up, Deutsche Börse is on the prowl – and Rolet's on a roll

Trust the TUC to attack one of the few industries which is doing well in our tough times, providing jobs as well as thrills. Just as the unions came out with their damning indictment of high heels came the news from Next and Debenhams that women just can't stop buying shoes, the higher the better. I thought Debenhams deputy chief executive put it rather well when he said: "Girls are incapable of stopping themselves buying shoes." The two retailers are now frantically expanding their footwear departments to sell as many of the neon-coloured, bondage, peep-toe shoe boots with heels as they can – the more outrageous the better. This recession really is prompting the oddest changes in behaviour – at Kingfisher, the owner of B&Q, buyers are now stocking up on sties for pigs following the big rise in chicken coop sales. Women collecting eggs had better watch their steps.

Shares in the London Stock Exchange soared another 10 per cent last week on renewed takeover buzz that Deutsche Börse is back on the prowl and news that Xavier Rolet, the LSE's new boss, has finally and sensibly brought IT back in-house by buying MillenniumIT.

That the German exchange is back is not new – it never really went away. The two exchanges have been in an off-on courtship for more than a decade, and London has been right not to take up its approaches.

Rolet has only been in the job for a few months, so it's understandable that he should look at all possible deals or joint ventures to strengthen the exchange. But the mantra that exchanges will inevitably consolidate is not looking quite so realistic and it's interesting that so few – other than New York and Euronext – have done deals.

Rolet should resist any urge to merge the LSE with its German rival. Deutsche owns Eurex, one of the world's biggest derivatives exchanges, which is bound to be hit by the bid by regulators to shift the over-the-counter derivatives market on to exchanges. This could hurt Eurex because – if the regulators do play hardball with the derivatives market, requiring capital and transparency – there could be a big drop in volumes. At the same time, Eurex could be the beneficiary because of the shift on to exchanges, but the outcome is a big gamble. No wonder Deutsche is looking for strong partners.

Rolet should turn his eye to bread-and-butter clearing. He could look at LCH, the London clearing house which is being bid for by a consortium of banks and brokers, including ICAP. LCH would be a good business to be in even though it overturns another mantra – that horizontal is better than vertical.

The European regulators would be hard-pressed to stop the deal without forcing Deutsche Börse to drop its clearing. Rolet could have a lot of fun with this one.