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Should the European Commission - "Brussels", in the popular parlance - be allowed to step in to order the UK government to save a failing bank, whether it wants to pay the price or not?

The government worries that the City of London, with its 600 banks, 420 of them European, and its flow of 250bn euros a year, could be hit hard by new tighter rules on financial institutions. The debate about this will be the centrepiece of Thursday's meeting of the EU's 27 prime ministers and presidents.

Of course, after the financial crisis there is a clamour for stricter rules and it has been taken up with enthusiasm by France, Germany and the European Commission. The plan on the table is for a new three-headed EU watchdog to control banks, insurance and securities.

The problem, as so often in politics, is "who picks up the tab?" Although no other big government seems seriously worried (Slovenia, Slovakia and Romania are our partners in opposing the plan) the British say that because of the size of the City, we will be affected disproportionately. Ministers say they worry that the EU institution will be able to tell them to pump money into a failing bank: power without responsibility.

The cry of the UK government is not "no taxation without representation" but "no liability without responsibility". It's not quite as catchy, and Gordon Brown won't be rigged out in feathered headgear throwing Earl Grey out of the window of the Council building into the Rue de la Loi outside. But as one source put it, "we're not going to have the Commission take the decision and find the bill lands on our table".

What I can't quite figure out at the moment is whether the objection is a winnable battle, to act as a smokescreen for going along with a lot of other stuff that people in the City won't like (hedge funds won't even be discussed at this summit), or if a British victory would be real, and so completely emasculate the Commission plan.

But this goes to the heart of several debates about the purpose of the European Union. It is pretty clear that financial institutions are multinational and have outstripped the national institutions set up to police them. Some governments want to create multinational institutions to match, others worry about handing over that much of their power. And could the mantra "no liability without responsibility" apply to other areas of EU policy?

This is not the only subject on the agenda: more later on Ireland and the Lisbon Treaty and Commission president Barroso's future.

Update 11:59 18 June: It's "Be Nice To Gordon Day" in Brussels.

Although the leaders of other big EU countries want banks regulated at a European Union level, they are not up for a bruising fight with Mr Brown. Especially not one that humiliates him.

The word around town is that the French are worried that Mr Brown is so weak that to undermine him further could bring a snap general election that much nearer. That would bring a Conservative government that much nearer. Which would bring a British referendum that much nearer. Which would probably kill off the Lisbon Treaty. As one official put it to me, "we can do business with Cameron, but we want to get Lisbon through first".

The same concerns lie behind another big subject at the summit: the guarantees given to the Irish ahead of a second referendum on Lisbon.

The Irish want them copper-bottomed, water-tight and any other secure industrial metaphor you can think of. The best way of doing this is by making them a protocol. But that needs ratification, and would that re-open the argument about referendums in other countries, not least in Britain.

Would Mr Cameron promise a referendum on ratifying such clarifications?

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