The second nightmare for the prime minister is the prospect of the Labour party being seriously split over the affair with grass roots activists in London defying his leadership and supporting Mr Livingstone.

BBC: Blair's mayor crisis

Asked about the prospect of a wider referendum at prime minister's questions, Mr Cameron said "we are in Europe and we have to make it work for us".

BBC: Tory MPs seeking Labour dialogue over 'EU overhaul'

Commentators and politicians have offered the prime minister their advice, reflecting on the prospect of a referendum after the next election, the benefits of life inside and outside the EU and divisions within the Conservative Party.

BBC: UK Politics

But then France, with its commitment to introduce a 35-hour week and its socialist prime minister, Lionel Jospin, is hardly a more alluring prospect.

ECONOMIST: Farewell, golden goose | The

Deputy Prime Minister Nick Clegg said Labour was well aware there was "absolutely no prospect" of achieving a real-terms cut.

BBC: George Osborne says 'real test' on EU budget to come

It is roughly five years since the US housing market bubble started to deflate, helping to tip the economy into recession and exposing the extent of the sub-prime mortgage scandal in which many people took out loans that they had little prospect of repaying.

BBC: US new-home sales in 2012 reach three-year high