David Cameron is facing a potential rebellion in the Commons over his policy towards the European Union budget.

The prime minister is expected to press for it to be frozen in real terms but almost 40 Conservative MPs have signed an amendment calling for a cut.

The Conservative MP George Eustace, an ally of the chancellor, told the Today programme's Justin Webb that the government deserves credit: "They set out two years ago a position which was to have at the very most an inflationary increase, hopefully less.

"And the actual thing the government can do is to veto the budget which would then lead to an inflationary rise anyway," he added.

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