Angela Merkel has set the boundaries of David Cameron’s EU negotiations: he would be well-advised to take heed

Suddenly the boundaries of David Cameron’s EU renegotiation are set – even if it is not the Prime Minister who sets them. Cameron’s negotiating stance remains fairly vague. Instead Angela Merkel outlines the limits of what can change, and she does so with explosive clarity.

First the German Chancellor makes clear that she will not accept fundamental changes to the rules governing free movement of labour within Europe. This is hardly a surprise. There is not a single leader apart from Cameron who seeks such a fundamental reform, if indeed that is what the Prime Minister seeks. More significant is the ruthlessness of Merkel’s second, broader argument. She will not compromise beyond a certain point. In the end she would prefer the UK out of the EU rather than to implement changes that she does not support.

Merkel’s views are expressed through an article in Der Spiegel rather than in the form of an interview, but that should not detract from their potency. She would be daft to declaim in public. That is the role of successive British leaders who feel the need to play to various galleries in ways that usually land them in more trouble. The views expressed in Der Spiegel are hers and need to be taken seriously.

In the early summer a close ally of Merkel expressed to me her stance in precisely the same way as outlined in the article, insisting it was a myth that the German leader would do whatever it took to keep the UK in the EU. He told me that the UK’s demands – and ultimate fate – were not even her main priority within Europe. Her overwhelming focus was on the eurozone, in which the UK plays no part. Yes, Merkel would prefer the UK to remain in, but not at any cost.

The Conservative MP David Davis is a sharp reader of the rhythms of politics in the UK and in Europe, but he is wrong to suggest that Merkel is merely stating an early negotiating position, as he asserted on the Today programme. She would not be briefing now if she intended to budge later.

The combination of Merkel’s clarity, the position of many Conservative MPs, and the rise of Ukip place Cameron in a nightmare position. Of the three factors, the most complicated and challenging is the rise of Ukip. Without Ukip as an alternative vehicle for his supporters, there was a route that Cameron could have taken. It would still have been problematic but it might have got him to a manageable position. He could have spoken truthfully to his MPs about the impossibility of negotiating away freedom of movement within the EU and then outlined what might be possible to achieve in his talks with the rest of Europe. Perhaps in the end he will opt still for such candour when he makes his speech on immigration later this year. Whether he does or not, expectations in relation to the address are already dangerously high from Cameron’s perspective. He will have to say something big even if he can deliver little.

Currently there is renewed focus in No 10 on benefit curbs in relation to immigrants, an area where there is some room to bring about change of policy, but such a move would not seal any deal for Cameron with his party. The apparently “tough” policy would do little to reduce the number of immigrants, as nearly all come to the UK to earn money and not to scrape a living off benefits. David Davis spoke for a section of his parliamentary party when he made clear in his interview that he would want more than curbs on benefits.

No wonder Cameron is taking his time to deliver the immigration speech. Once it was scheduled to take place before the Rochester by-election. Now it will take place after. There are parallels with his famous In/Out referendum speech, which was postponed several times. Perhaps this one will be postponed indefinitely, although there are limits as to how far into the long grass an issue can be kicked.

The farce and tragedy of the Conservatives’ current contortions is that a reformed EU is a very achievable objective. In the UK and elsewhere the Eurosceptics are right when they argue that the EU tries to do too much and should focus on what is in the joint interests of members, nothing more. Few EU members dispute this assertion. There is quite a consensus about the need for economic reform, and broad agreement across Europe that the EU is too bureaucratic and wasteful. Complex questions in relation to transparency and accountability need addressing. Few members are opposed to such a proposition. Which country, struggling to cope economically at the moment, would be in favour of inefficiency and an excess of bureaucrats stifling transparency and accountability?

For much of this long-running saga Europe has been fairly tolerant of the UK as it huffed and puffed angrily. In spite of being a troublemaker, the UK tends to be appeased rather than knocked about. Look how the UK secured an economic portfolio as the new commission was formed this summer, even though Cameron had declared his vehement opposition to the new EU President. But note also how Merkel had warned that Cameron would not prevail over who should and who should not become president of the Commission. When she makes her moves she acts with steely purpose. She does so now.

At some point in his negotiation Cameron knows he will almost certainly have to state explicitly that he would recommend pulling out if he does not get the outcome he wants. Merkel makes a pre-emptive strike by pointing out how she would respond. Instead of conceding ground in an attempt to keep the UK in, we now know what she and others would say in such circumstances: Thank you and goodbye.