Eurozone ‘skating on thin ice’ and in danger of collapse, Clegg warns

Amid frantic negotiations on a rescue package for the single currency area, the Deputy Prime Minister raised the prospect that the “whole edifice” could collapse.

But he insisted that the fundamental reforms needed would apply to the 17 member states rather than the full EU – and a referendum would not be needed in Britain.

German chancellor Angela Merkel and French president Nicolas Sarkozy are expected to discuss moves to closer fiscal integration of core euro countries at a meeting tomorrow.

EU leaders hope to agree an outline of changes when they gather in Brussels on Friday.

The Liberal Democrat leader said: “I think there is no doubt in my view that the whole edifice upon which the eurozone is based is now skating on very thin ice indeed.

“Obviously, we must protect British interests … but any reasonable person must wish the French and German and others the best of luck in sorting this out.”

He went on: “I don’t think there needs to be a referendum on Europe.

“The referendum will only take place if there was an additional surrender of sovereignty from us to the European Union.

“The test which we have legislated on is if we, the UK, give up more sovereignty in a significant way to the EU.”

However, Work and Pensions Secretary Iain Duncan Smith struck a notably different tone.

He appeared to align himself with many on the Tory right by suggesting that the impact from any treaty change would demand a national vote.

“The Prime Minister has always been clear, if there are substantial changes that affect Britain’s position, then he would go for a referendum because that’s what we said to the British public we would do,” he said.

He also renewed calls for the UK to insist on repatriation of powers in return for backing treaty changes – a position flatly opposed by Mr Clegg.