Leading article: A pragmatic policy – shame about the rhetoric

David Cameron campaigned in the general election as a Eurosceptic who would repatriate powers from Brussels at the first available opportunity. But the Prime Minister, following a well-trodden route, has gone into his first European Union summit this week as a classic Europragmatist.

Mr Cameron has urged his fellow leaders not to approve a 5.9 per cent rise in the EU's 2011 budget, but he is expected to settle for an increase in national contributions of half that amount. The word is that Mr Cameron is keeping his powder dry for negotiations next year on the EU's 2014-2020 spending plans. The Prime Minister also seems set to allow Franco-German moves to amend the Lisbon Treaty to impose greater fiscal discipline on eurozone member states, with voting rights suspended for those ones that overspend. He will not push the nuclear button of demanding a UK referendum on the treaty change on the grounds that, since Britain is not in the eurozone, the reform would not affect us.

It is a stance of impeccable moderation. Yet, depressingly, Mr Cameron has felt the need to adopt some shrill language in order to disguise his pragmatism and appease his party's europhobic right-wing. When questioned on the EU budget in Prime Minister's Questions on Wednesday, Mr Cameron invoked the spirit of Margaret Thatcher. This serves to illustrate how reactionary much of the Conservative Party base remains when it comes to the EU.

It also serves to demonstrate their lack of proportion. The fury that has been generated on these issues does not match their importance – or rather misunderstands it. Some Conservative backbenchers speak as if, by ending contributions to Brussels, Britain could get rid of the deficit tomorrow. Yet for the UK, a 2.9 per cent rise on the existing £8bn contribution to the EU budget would cost taxpayers £400m – hardly a significant amount in the context of a £155bn deficit.

As for the proposed treaty reform, Mr Cameron is right that it would not represent some great assault on UK sovereignty. The irony is that it would also be of limited relevance for the stability of eurozone finances.

Fiscal indiscipline was not the root cause of the Continent's economic crisis. It is true that Greece was fiddling its national accounts and that markets received a destabilising shock when the true scale of Athens's borrowings was revealed earlier this year. But Greece was the exception. The ballooning deficits in most other EU states since the crisis began have not been a result of fiscal indiscipline, but private-sector economic meltdowns.

The sanctions on over-spending states that are being suggested by Germany and France miss the point. Spain and Ireland, two of the worst-hit nations in the crisis, were model EU members in terms of public borrowing during the boom. Both ran surpluses, rather than deficits. What has destroyed their public finances in the bust is a private-sector collapse that has wiped out tax revenues and necessitated public rescues of failed banks. The new EU sanctions would do nothing to prevent such a crisis repeating itself.

Though Britain will not force a national referendum on a treaty amendment, other nations such as Ireland might not be so obliging. And this could be disastrous for the EU. There is already resentment building at a plan regarded as a Franco-German stitch-up. Europe could be drifting in the direction of another Lisbon-style train wreck – and all for a reform that fails to address the underlying instabilities of European economies. All the more reason for Mr Cameron not to make matters worse by injecting British angst into this volatile EU mix.