Brexit: Major changes to EU workings in Cameron’s draft deal

European Council president Donald Tusk has warned of "challenging negotiations ahead" as he published a draft settlement for Britain ahead of a referendum on Britain's EU membership.

The landmark proposal – which includes far-reaching changes to the way the European Union works – was sent to senior officials representing the EU's 27 other member states on Tuesday morning. Its publication sets in train two weeks of feverish negotiation ahead of a summit in mid-February that could decide Britain's future in the European Union.

If agreed by all 28 EU member states at a summit this month, the proposal will pave the way for a referendum on Britain’s membership of the EU as early as June, with June 23rd seen as the most likely date according to officials.

Publishing the proposal, Mr Tusk said that while the settlement "goes really far" in addressing all the concerns raised by Britain's prime minister David Cameron, the fundamental principles of the European Union were not in jeopardy. "The line I did not cross... were the principles on which the European project is founded," he said in his letter to EU leaders.

Noting that “nothing is agreed until everything is agreed,” Mr Tusk said that all sides needed to compromise, raising the prospect of tough negotiations over the next two weeks.

The proposal is the result of months of backroom negotiations and legal discussion prompted by Britain’s decision to hold a referendum on EU membership by the end of 2017.

It addresses the four main "baskets" identified by Mr Cameron as requiring change if he is to campaign for Britain to stay in the European Union.

Most controversially, the paper proposes an “emergency brake” that would allow countries to curb in-work benefits to migrants for up to four years should a country’s welfare system be deemed to be under “exceptional” strain from immigration. Noting that “different levels of remuneration among the Member States make some offers of employment more attractive than others” it says it is “legitimate” to “provide for measures avoiding or limiting flows of workers of such a scale that they have negative effects both for the Member States of origin and for the Member States of destination”.

But the document contains no final figure for the duration of the “safeguard mechanism”, raising the prospect that this could become a key subject of contention in the next two weeks.

It also suggests a “graduated” limitation, rather than an outright ban on benefits, which would gradually increase “to take account of the growing connection of the worker with the labour market”.

The proposal also contains other measures relating to social security. In place of the current system, where EU citizens can claim child benefit for children living in other member states, the proposal suggests that the paying country can reduce the amount they pay by taking into account the living standards of the original country.

It also promises to clamp down on so-called “sham marriages”, another key British demand.

While the proposal on migrant benefits may fall short of some of Britain’s demands, the lengthy legal text nonetheless presents some far-reaching changes to the functioning of the European Union in key areas.

On the question of greater power for national parliaments, the proposal tackles the concerns of Britain and other countries that too much power is invested in the EU institutions.

While noting that the principle of subsidiarity is already enshrined in EU law, ensuring that decisions are taken as closely as possible to the citizen, the proposal introduces a new system that would allow a majority of national parliaments to stop or amend EU legislation.

Should member states representing more than 55 per cent of the votes allocated to the national parliaments raise objections within 12 weeks of a draft proposal being published, the proposal would be amended or discontinued, the document states.

It is expected that this measure will address voters’ concerns that too much power has been devolved to Brussels.

On the subject of "ever-closer union" and further EU integration, the settlement specifically references Britain: "It is recognised that the United Kingdom, in the light of the specific situation it has under the Treaties, is not committed to further political integration into the European Union," the text states, noting that the substance of this will be incorporated into the EU treaties at the time of their next revision.

Regarding safeguards for non euro zone member states, the draft proposal does allow for the possibility that if certain principles are called into question regarding the relationship between euro and non-euro member states, the issue may be able to be referred to all 28 EU member states at European Council level.

With just over two weeks until the next meeting of EU leaders, negotiations at diplomatic and technical level are expected to intensify in coming days.

Senior officials from all 28 EU member states will have their first official meeting on the draft proposal on Friday in Brussels, while European Commission president Jean-Claude Juncker is due to update MEPs on the renegotiation in the European Parliament in Strasbourg on Wednesday morning.

On Friday, Mr Cameron flies to Poland and Denmark for talks, while he is due to meet Germany's chancellor Angela Merkel in Hamburg on February 12th.