Grand bargain emerging on Europe as Germany adjusts to Cameron victory

“It looks as if they have stopped tilting at windmills and are keeping their demands moderate. They know that repatriation is not on,” said Charles Grant, director of the Centre for European Reform.

...Mr Grant said Britain could be offered an international treaty outside the EU structure, the formula used for Denmark’s opt-outs from the euro in the early 1990s. “This would avoid the complicated process of ratification by all 28 states. It would look solemn and binding but would really be just a protocol. It could then be included in the EU treaties later,” he said.

Mr Grant said the Germans remain extremely reluctant to start full-blown EU treaty talks, fearing that the southern European states would seize on the talks to push for an end to fiscal austerity. “They simply don’t trust the French and the Italians on budgets,” he said.