Nick Clegg's fighting talk on Europe

Nick Clegg launched a fight back in Cabinet today by demanding that the Government "re-engage" with the EU and making clear he will play a major role in rebuilding alliances.

Fresh from the humiliation of being absent as David Cameron addressed the Commons on his use of the British veto, the Liberal Democrat leader used this morning's weekly meeting to make clear he wants a positive approach to the EU.

Sources said the meeting passed without an argument, despite seething tempers over the veto. "The mood was more, 'Where do we go from here', " said a source. Mr Cameron's official spokesman said Cabinet discussed the EU issue for almost an hour, adding: "It was a good conversation." Sources said Mr Clegg will host a breakfast for business leaders and exporters to Europe tomorrow.

European officials and leaders today lashed out at the Prime Minister, accusing him of making "the blunder of a lifetime" and calling for Britain's £2.7 billion rebate to be cut in punishment.

Mr Cameron caused uproar in the Coalition last Friday by vetoing the treaty designed to bolster the euro because other leaders refused to insert safeguards for the City of London. Recriminations erupted at the European Parliament in Strasbourg. European Commission president José Manuel Barroso blamed Mr Cameron squarely for the summit failure.

"The United Kingdom, in exchange for giving its agreement, asked for a specific protocol on financial services which, as presented, was a risk to the integrity of the internal market," he said.

"This made compromise impossible. All other heads of government were left with the choice between paying this price or moving ahead without the UK's participation and accepting an internal agreement among them."

In scathing terms, Mr Barroso said it was not a split between the 17 eurozone countries and the 10 non-euro states "but an agreement at 27-minus", meaning everyone except Britain.

French MEP Joseph Daul, who chairs the parliament's centre-Right European People's Party group, said "selfish" Britain should be stripped of its rebate.

"The British cheque is now up for question. Tax monies should be spent on someone else rather than compensating selfish nationalism," he said. Negotiated by Margaret Thatcher, the rebate is up for renegotiation as part of budget talks.