Betting tips / Paul Krishnamurty / 14 December 2011 / Leave a comment Bet Now View Market

After David Cameron's controversial Euro-veto decision last week, Paul Krishnamurty warns you to beware short-term conclusions when it comes to how it will affect the Tories' chance of reelection.

Very occasionally - perhaps only once in a generation - a dramatic event has the potential to completely change the political weather, with ramifications for years to come.

Think Black Wednesday, or 9/11, for example.

Judging by the way it has dominated parliament, the international media and even one suspects many a weekend pub conversation, David Cameron's dramatic use of the British veto at last Friday's EU-summit was one of them.

Many people hold passionate views about the EU, and while they are often implacably opposed to one another, everyone appears to recognise the significance of this moment. With the benefit of a few days reflection, it is time to assess the long-term fallout, and it's effect on political betting markets.

As an immediate vote-winning strategy, there can be little doubt Cameron has played a blinder for his party. Polls taken this weekend showed a small boost for the Conservatives, and more significantly, widespread public support for his use of the veto. Polls by Yougov and Populus recorded 58 and 57% approval, reading well for a party that repeatedly fails to register 40% support.

While defeat for [1.01] favourites Labour in Thursday's Feltham and Heston by-election is almost unimaginable, one must expect a better result for the Tories than would otherwise be the case.

This is a moment of maximum danger for Cameron's political opponents, and even his partners. Just as Ed Miliband cannot afford a lasting pro-Tory swing, Lib Dems will be chilled at being labelled 'lickspittle Euro-fanatics' by Tory backbenchers. After criticising Cameron's move and missing yesterday's debate in Parliament, Nick Clegg is again under severe pressure. Grassroots Lib Dems and perhaps some of his parliamentary colleagues may soon find life inside a loveless marriage unbearable, and seek to withdraw from the coalition. Mitigating against such a dramatic move is that any resulting snap election would probably be catastrophic for the party.

However, punters should think twice before drawing snap conclusions and piling into the Tories at [1.87] to win the next General Election, and consider how all of this might play out in the longer term.

The EU is not a popular institution, which explains the support for Cameron's veto, but the reasons for that unpopularity are numerous. Some simply dislike it's bureaucratic nature, others the loss of fishing rights, effect of immigration or specific regulations. Few ever mention hostility towards the City of London, whose defence was Cameron's justification for the veto. By standing up for the latter, he has probably given up any hope of affecting any of the former. Tory policy is to repatriate powers from the EU, yet it is hard to see how that can be achieved now, with Britain a lone voice against all 26 partners.

That contradiction may plague Cameron in the years ahead, with both his own party and coalition partners. In yesterday's statement to Parliament, the PM repeated that he believed EU membership was essential to the national interest. So while Eurosceptic backbenchers may cheer him today, if indeed no powers are repatriated, many will probably call for Britain to leave the EU. The logical conclusion of this weekend's events is a referendum on EU membership, and without dramatically changing his tune, Cameron will find himself in the bizarre position of having to support the 'In' camp. While UKIP's recent bounce may have stalled for now, Nigel Farage may yet prove to be the true voice of British Euroscepticism, as opposed to a PM whose nuanced position confuses voters, and fails to bring back the powers they really care about.

Likewise, there are avenues of opportunity for pro-Europeans in the Labour and Lib Dem parties. If in due course, British manufacturing jobs disappear, they will doubtless attack Cameron's needlessly antagonistic stance towards our main exporters.

It was interesting to see Lord Oakeshott, (the Lib Dem peer suspected as speaking for Business Secretary Vince Cable), say that "It was a mistake to look after, frankly, the spivvier end of the City of London not British business as a whole". In short, the future line will be to label the Tories as defending bankers, rather than manufacturing jobs, or delivering on promises to repatriate powers.

Nor, as the BBC's Robert Peston points out, is the instant reaction from business particularly encouraging for Cameron, with many concerned that he's given up a seat at the negotiating table on issues that fundamentally affect Britain.

Martin Sorrell, CEO of WPP and usually sympathetic to Tory policy, was particularly lukewarm on The Daily Politics yesterday. Rather than this veto 'protecting British interests', it is easy to imagine a scenario where the other 26 EU members engineer alternative ways of squeezing out the City.

Ultimately, it is these such events, beyond Westminster, that will determine Cameron's fate. With the Euro crisis seemingly no nearer a solution and the EU's future consequently on a knife-edge, it might pay to lead the rats deserting a sinking ship.

Alternatively, if Eurozone countries can summon the political will to survive the downturn, taking whatever measures are necessary to protect the currency, Britain could end up dangerously isolated. Were the bond markets to lose confidence, or merely reverse their recent 'Flight to Quality' strategy, George Osborne's boasts about the UK being a 'safe haven' will look rather hollow.

Only one thing is guaranteed in these deeply uncertain times - this row will run and run.