The co-founder of a new Conservative Eurosceptic group in Britain says they will work with the UK Independence Party (Ukip) in leading a Brexit campaign if prime minister David Cameron fails to renegotiate the UK's European deal.
The comments come as Cameron was today forced to backtrack over his threat that ministers should resign if they didn't agree with the government's position on Europe, something he now says was misinterpreted.
Conservatives for Britain, which was launched this weekend and already allegedly claims the support of around 100 MPs, is being led by Conservative MEP David Campbell Bannerman, a former Ukip deputy leader.
The group's creation marks a new era in Conservative division over Europe and piles pressure on the prime minister as he seeks to change the terms of Britain's EU membership despite overwhelming international opposition.
Bannerman told Newsweek that, unless "fundamental change" is achieved by the prime minister, the group would be willing to turn to Nigel Farage's party to build a broad-based 'out' campaign.
"In an 'out' campaign, if we got to the position where renegotiation wasn't fundamental enough then yes, we would look to cooperate with other groups and parties," he said when asked if the group would work with Ukip.
Ukip are avowedly Eurosceptic and have made the issue their number one priority after a disappointing return of just one MP in May's general election. Farage has said he will lead the Brexit campaign and is willing to work with other parties to ensure the UK gets out.
The European issue is already causing cracks in the Conservative party ahead of a referendum promised by the end of 2017. Today, Cameron insisted that he had been misinterpreted after it was widely reported that he had said government ministers had "signed up" to his manifesto plans on Europe and would therefore have no choice but to resign if they disagreed.
Conservatives for Britain, which already has 50 MPs among its membership including former environment secretary Owen Paterson, look set to be a powerful internal pressure group as Cameron goes about his negotiations. Among other things, the group is calling for caps on EU immigration and a veto for parliament over EU laws.
Setting out the group's aims in the Telegraph this weekend, co-founder Steve Baker MP said that they would strive to "end the supremacy of EU law over ever more matters of British life".
He said: "We wish David Cameron every success but, unless senior EU officials awake to the possibility that one of the EU's largest members is serious about a fundamental change in our relationship, our recommendation to British voters seems likely to be exit."
The EU referendum has been vehemently opposed by the SNP, which now has 56 MPs in Westminster and constitutes a substantial parliamentary force. SNP leader Nicola Sturgeon has previously said that another independence referendum could be called if the UK takes Scotland out of Europe against its will.
However, Bannerman says that a Scottish decision to leave the UK after a Brexit would be "disastrous" and would leave Scotland behind countries such as Serbia and Turkey in the pecking order for EU membership.
"Why are they [the SNP] suddenly trying to attach conditions to the EU referendum that they didn't have with the Scottish referendum? It's a bit hypocritical to try and propose those terms," he says.
The possibility of Brexit has been widely opposed by Britain's international partners. Speaking at the G7 summit, US president Barack Obama said he was "looking forward" to Britain remaining in the EU. German chancellor Angela Merkel has also expressed her desire for the UK to remain in, while leaving room for some flexibility as to the terms of membership.
At home, several business groups have expressed concerns over the possible trade implications of a Brexit. Financial giants HSBC and Deutsche Bank have both said they could reconsider their bases in the UK due to uncertainty surrounding the EU referendum. The CBI, which represents almost 200,000 British businesses, has also called on members to back the UK's membership of a reformed EU.
Lucy Thomas, campaign director for pro-EU business lobby Business for New Europe, told Newsweek: "The threat to British business is that we leave Europe and find ourselves shut out of decisions which still affect us. Conservatives for Britain are manipulating what the prime minister has previously called for in terms of reform in order to raise the bar impossibly high."
A spokesperson for Ukip said: "As we, and Nigel Farage, have said repeatedly, Ukip will be delighted to work with almost anyone in order to restore independence to this country.
"We however are starting our campaign now, as we believe that nothing in the proposed negotiation strategy will provide the independence this country deserves."
The Conservative party were unavailable for comment.
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Conor is a staff writer for Newsweek covering Africa, with a focus on Nigeria, security and conflict.
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