It would be "unimaginable" for Britain to leave the European Union, German Finance Minister Wolfgang Schaeuble has said.

"Historically, politically, democratically, culturally, Great Britain is entirely indispensable for Europe," Mr Schaeuble told the Financial Times.

Mr Schaeuble is one of Chancellor Angela Merkel's closest confidants.

Speculation over a possible exit by the UK from the EU has increased after British Prime Minister David Cameron failed to block Jean-Claude Juncker from becoming European Commission president.

Mr Cameron will address the Commons later today over his failure to stop Mr Juncker’s appointment, and is now insisting he will work with him to secure a "fair deal" with the EU.

Mr Cameron is likely to face criticism from the opposition Labour party, although eurosceptics in the Conservative party broadly support his stance.

Ahead of his Commons appearance, Mr Cameron wrote in The Telegraph that he hoped to work with Mr Juncker to gain a "fair deal" for Britain in Europe.

"If by a fair deal we can agree that we are not heading, at different speeds, to the same place - as some have assumed up to now - then there is business we can do," Mr Cameron wrote.

"I do not oppose further integration within the eurozone: I think it is inevitable. Eurozone members must make those decisions.

"But I know the British people want no part of it."

Mr Cameron forced an unprecedented vote on Mr Juncker's nomination at a European summit in Brussels on Friday.

But he lost 26-2, with only Hungary's right-wing prime minister Viktor Orbán supporting him.

Mr Cameron called Mr Juncker yesterday to congratulate him on the job.

He has said the result could increase the prospects of Britain leaving the EU after a referendum on the issue slated for 2017.

However, he denied in The Telegraph piece that the vote had dealt a "fatal blow" to his strategy of renegotiating Britain's position in Europe before then.

"I do not deny that it has made the task harder and the stakes higher," Mr Cameron added. "But it is not in our nature as a country to give up. That is not what we do."