The European summit is underway in Brussels with tighter defence co-operation on the agenda as well as a tighter harnessing of the eurozone’s banks.

The Commission wants to reduce duplication in Europe’s armed forces. It is also considering developing European “remotely piloted aircraft systems” – drones – as part of a strengthened common defence policy.

Britain is opposed.

“It makes sense for Nation States to co-operate over matters of defence, to keep us all safer, it is all in our interests. But it isn’t right for the European Union to have capabilities, armies, air forces and the rest of it. We need that demarcation correct between co-operation, which is right, and EU capabilities which is wrong,” British Prime Minister David Cameron said as he arrived for the summit.

Britain argues that defence equipment should be nationally owned and fears changes might undermine NATO. But the head of the alliance sees little danger.

“This is not about a European army. This is about nations, individual nations investing more in critical areas such as observation drones, air-to-air refuelling, heavy air transport. And if European nations do that, they will also strengthen NATO,” Secretary General Anders Fogh Rasmussen said.

The summit has also shown the first signs of unease over the banking deal struck by eurozone finance ministers beforehand.

Building a fund to help failed banks is aimed at reducing taxpayers’ liability, but plans have been criticised.

“Banking union: yes or no? Banking union: yes!” said Martin Schulz, the President of the European Parliament. “That was already said in the past, we are in favour of a banking union, we need it as soon as possible… Concerning the proposals on the table, we have to negotiate.”

On Friday the summit will also consider Ukraine, the Central African Republic, and immigration.

Potential constraints on EU migrants to Britain are seen as a challenge to the principle of free movement and may also set the UK at odds with other countries.