British deputy prime minister Nick Clegg said today he was “bitterly disappointed” by the outcome of last week’s European Council when David Cameron wielded his veto.

He warned that Britain could be left “isolated and marginalised” in the wake of the summit.

Mr Cameron on Friday opted out of a plan to forge ahead with a new European Union treaty with a tougher deficit and debt regime to avoid a repetition of the debt crisis in future, saying it did not contain safeguards for Britain's financial services industry.

"I'm bitterly disappointed by the outcome of last week's summit, precisely because I think now there is a danger that the UK will be isolated and marginalised within the European Union," the Liberal Democrats leader told BBC1's Andrew Marr Show.

“I don’t think that’s good for jobs, in the City or elsewhere, I don’t think it’s good for growth or for families up and down the country.”

He said he would now be doing “everything I can to ensure this setback does not become a permanent divide”.

However, Mr Clegg denied the coalition was on the verge of collapse. "It would be even more damaging for us as a country if the coalition government were now to fall apart. That would create economic disaster for the country at a time of great economic uncertainty," he said.

But Mr Clegg criticised some members of the Conservative Party who want Britain to leave the EU.

"A Britain which leaves the EU will be considered to be irrelevant by Washington and would be considered a pygmy in the world when I want us to stand tall and lead in the world," he said.

Mr Clegg dismissed calls for a referendum on Britain's relationship with Europe, saying: "Far from retreating further to the margins, which is what some eurosceptics want, we should be re-engaging fully and we are going to have to
redouble our efforts in doing so."

Agencies