David Cameron has demanded that Brussels stop "picking the pockets" of the public amid growing pressure for him to reject budget hikes this week.
The Prime Minister said it was "not credible" for the EU's funding package to escape the pain of austerity, and insisted fat cat officials should accept cuts. Speaking at the CBI conference in central London, Mr Cameron said pushing for curbs made him "a good European".
But the premier was facing a battle to hold his party together as sceptics renewed their drive for a fundamental rethink of Britain's relationship with Europe. Failure to return from the key summit on Thursday and Friday with a real-terms reduction in the EU budget for 2014-20 would fuel unrest among backbenchers.
Tory "big beast" David Davis called for two referendums on the EU - one within a year to approve a list of powers for the UK to seize back, and then an in-out poll once they had been negotiated. Mr Davis said he was prepared to bet a "large sum of money" on the UK exiting the grouping within a decade if the Government failed to secure significant change in its relationship.
In a speech at London's St Stephen's Club, the former shadow home secretary called for all justice and home powers to be repatriated permanently along with control over immigration and employment legislation.
Meanwhile, London Mayor Boris Johnson said it was time for Mr Cameron to emulate his Tory predecessor Margaret Thatcher and stand up to Europe. Writing in his column in the Daily Telegraph, Mr Johnson insisted: "It may be impossible to cut the budget, since there is no other country actively proposing this excellent option. But there is no reason at all why EU spending should not be frozen exactly where it is.
"The worst that can happen is that the existing budget will be rolled over, a month at a time. It is time for David Cameron to put on that pineapple-coloured wig and powder blue suit, whirl his handbag round his head and bring it crashing to the table with the words no, non, nein, neen, nee, ne, ei and ochi, until they get the message."
However, veteran Cabinet pro-European Ken Clarke warned that the UK's negotiating position over the budget was being undermined by the "irresponsible" debate about its continuing membership. He said: "Putting our membership of the European Union at risk is complete folly, and irresponsible debate about it at the moment weakens Britain's role at a table where a lot of very important things have to be said."
CBI president Sir Roger Carr pointed out that Europe accounts for half of British exports, telling firms that, while they should look for new partners, they must not forget "old friends". Sir Roger, chairman of energy giant Centrica, said: "Whatever the popular appeal may be of withdrawal, businessmen and politicians must keep a bridge firmly in place. As countries of Europe bind together in pursuit of salvation, we in the UK must work harder to avoid the risks of isolation."
Labour leader Ed Miliband told the CBI that pressure on Mr Cameron from Eurosceptic Tories had forced the Prime Minister into "negotiations that will not deliver" for the repatriation of swathes of powers. Instead he should be concentrating on "building alliances" to agree reforms and ensure Britain does not lose out when eurozone countries deepen their ties in a new two-tier Europe, Mr Miliband said.