The princess was initially named as a suspect and subpoenaed to testify in an investigation of fraud and embezzlement centring on her husband, Iñaki Urdangarin, the Duke of Palma, but the decision was reversed by a judge on appeal earlier this month.

However, the same judge on Friday ordered a fresh probe into the financial affairs of the Infanta after examining 10 years of her tax returns submitted to the court in the investigation against her husband.

Jose Castro, investigating magistrate at the Palma de Majorca court in charge of the Noos case, ordered Spain's Treasury to provide him with a report on the Princess's property and other assets.

The allegation is that Princess Cristina may have been aware that funds coming into the Aizoon company – of which she had a 50 per cent stake – may have resulted from the alleged embezzlement of which her husband is accused.

The company may also have been used to launder money that was then spent on private investments by the Royal couple including possibly the refurbishment of their home in Barcelona.

The development comes after the Princess lost an appeal to block any further scrutiny of her tax filings when she was cleared of suspicion in her husband's case and her subpoena dropped.

The investigation will examine whether the Princess "was aware that Aizoon was a shell company and that her husband used it to defraud the Treasury".

It could result in Princess Cristina becoming the first royal-born member of Spain's ruling family to be criminally charged in Spain, striking a further blow to Spain's monarchy which is already suffering plummeting popularity.

The King has sought to distance himself from the burgeoning scandal surrounding his son-in-law, a former Olympic handball champion who married Princess Cristina in 1997.

The Duke of Palma and his former business partner Diego Torres are accused of siphoning off a possible €6 million in public donations for sports and cultural events organised through the Noos Institute, a supposedly non-profit organisation that Urdangarin ran from 2004 to 2006.

In testimony, he has played down Cristina's role, saying his wife and royal in-laws had no real knowledge of nor involvement in his business dealings.

The europhile Independent wants us to believe that economics is more important than politics, giving a group of self-interested corporates license to peddle this lie in a letter to the paper, with front-page treatment afforded in this and the sister "I" publication.

It is in the latter paper that the lie is at its most prominent, the front-page legend (illustrated above) having it that, "Leaving the EU would cause economic disaster". And an egregious lie it is. Given our exit scenario, where we maintain the Single Market through membership of the EFTA/EEA, and then repatriate the acquis, the net effect of our withdrawal from the EU is economically neutral.

For sure, we lose some of our influence in the decision-making on the EU's versions of the rules for the Single Market, but this is largely compensated for by our regaining our influence on international bodies such as the WTO, UNECE, etc., from where most of the rules originate in the first place.

What these corporate pirates are doing, though, is conflating membership of the Single Market with membership of the EU. The very last thing this dishonest crew wants to do is admit that we can be members of the Single Market without belonging to the EU.

In peddling their lie, however, the corporates are aided and abetted by the "unilats" – the eurosceptic groupuscules who are wedded to the idea of unilateral withdrawal. These people are intent on precipitating exactly the economic disaster of which the corporates are now warning.

Nevertheless, the corporates have over-reached themselves. In complaining about eurosceptic MPs putting "politics before economics", they are placing their interests above those of the people. The EU is a political construct, and the argument over withdrawal is political. It is not about economics. It is about who governs Britain.

In this, elected MPs are perfectly right to put politics before economics. It is totally out of order for former VAT fraudsters like Branson to suggest otherwise. Business has every right to expect that its interests are taken account of, but when it comes to how we are governed, that is none of their business.

We the people must make that decision, and without the interference of the self-interested corporates, represented by the chairmen of BT, Deloitte, Lloyds, Centrica and others, who, when push comes to shove, are only interested in lining their own pockets at our expense.

The tiny island's move follows overwhelming public hostility to joining the EU, with only 25 per cent of people supporting it and is the first time that a country has changed its mind mid-way through entry talks.

A new coalition government has emerged in Iceland following elections last month where the EU was a major issue and has made the pledge for a popular vote the centre of its political programme.

"We will not continue the accession talks with the EU until after a referendum," said the coalition agreement unveiled by the island's liberal Progressive Party and conservative Independence Party.

The decision is a blow to the EU which is no longer regarded as a safe economic haven for small nations following the eurozone crisis and comes as Britain prepares for a 2017 referendum on membership.

Iceland applied for EU membership in 2009 following the collapse of its banks, which were mot bailed out by the government but now enjoys faster economic growth than the EU average at a time when the eurozone is still grappling with problems in its uncompetitive and troubled financial sector.

Negotiations between Reykjavik and Brussels began in July 2010 and work had advanced on 80 per cent of the 33 "chapters" required for EU membership before slowed before Iceland's elections in April "to give the election campaign the room it needs".

"It's their choice," said an EU official.

No other candidate has pulled out during talks although Norway voted against joining the EU after the completion of negotiations in 1972.

The Icelandic referendum will fuel British debate on EU membership and was welcomed by Nigel Farage, the leader of Ukip, as "fabulous news".

"They have really shown the way forward. Iceland clearly wants to protect its democracy, its fisheries and its economy. Little Europhiles should note that Iceland just signed a free trade agreement with China and has returned to economic growth," he said.

"This move by Iceland shows that the EU is more and more perceived as a failing political and economic project."

Martin Callanan MEP, the leader of the European Conservatives, which are affiliated to Iceland's Independence Party, also welcomed the decision.

"I can well understand why Iceland is reluctant to join the EU at the moment," he said. "It shows what a good idea a referendum is."

Local Conservative party campaigners, including the chairman of one constituency association, will this week pledge their support for Nigel Farage after one of David Cameron’s allies described grassroots Tories as “mad, swivel-eyed loons”.

Mr Farage uses an advertisement in Monday's Telegraph to urge Conservative voters to back Ukip. The “loons” description, he says, is “the ultimate insult” from a party leadership that has betrayed the trust of its own supporters.

He writes in the advertisement: “Only an administration run by a bunch of college kids, none of whom have ever had a proper job in their lives, could so arrogantly write off their own supporters.”

The Telegraph, which reported the comment along with other newspapers on Saturday, has not named the individual who made the remarks.

Lord Feldman, the co-chairman of the party, denied over the weekend that he had been responsible and was said to be considering legal action after internet rumours suggested he had made the comment.

The peer, who has known the Prime Minister since they were students at Oxford together, will be questioned by members of the party’s executive board, which he chairs, at a meeting in London on Monday.

The remarks were made by a senior figure in the party who has strong social connections to the Prime Minister. The figure argued that Tory MPs did not have a problem with Mr Cameron, but were being pressured to rebel on issues such as Europe and gay marriage by their local party associations, who are “all mad swivel-eyed loons”.

Last week, 116 Conservative MPs voted for a motion criticising the Queen’s Speech for failing to include a Bill allowing a referendum on European Union membership.

This week, up to 200 are said to be ready to reject the plan to legalise marriage for same-sex couples.

Many Tory MPs fear that Mr Cameron and his inner circle are out of touch with the concerns of grassroots activists and voters.

The Prime Minister’s own position was called into question as Tory members demanded that the Conservative leadership identify the individual responsible for the “loons” comment and eject that person from the party.

Six members of the Tory group on Merton council in south London are quitting. One, Richard Hilton, who has been acting chairman of the local Conservative association, said he would join Ukip because the insult was “the final straw”.

He added that the comment demonstrated “the arrogance and the attitude of the liberal elite that runs the Tory party nowadays”.

Suzanne Evans, another defecting Merton Tory councillor, said grassroots members worked “phenomenally hard” and would feel insulted by the comments.

Delyth Miles, a councillor and chairman of the Clacton constituency association in Essex, said Mr Cameron had “a duty” to show that the party does not tolerate such insults and should expel the person responsible for the “loon” comments from the party immediately.

Downing Street issued strong statements of support for Lord Feldman and denied “categorically” that anyone in Number 10 had made the comments.

Jeremy Hunt, the Health Secretary, told BBC One’s Andrew Marr Show he did not believe the reported comments: “The person who is alleged to have said that has denied it, and I know the individual and I trust him – he’s a man of great honour.”

Lord Feldman said on Saturday that the allegations on the internet which suggested he had made the remark were “completely untrue” and that he believed local Conservative associations to be “hard-working, committed and reasonable people”.

However, Lord Feldman will have to answer questions in person from his colleagues as he is due to chair the monthly meeting of the Conservative Party board in London this afternoon.

Brian Binley, a Tory MP and member of the party’s 19-strong ruling board, said: “The whole thing disturbs me enormously and needs to be discussed by the board because we need to have some answers.

“From what I have been told, comments of this kind were said. Whether they were said as a joke or not matters not because they were said to senior journalists and I do not believe journalists at that level or any level lie about a thing of this import.

“If it is a joke, it underlines a state of mind. If it isn’t, then it highlights an attitude to the voluntary sector in the party which is unacceptable.

“The voluntary sector is the Conservative Party. The leadership are the party’s caretakers, not its proprietors. These are the very people we will need to deliver leaflets, canvass and knock on doors.

“All this sort of remark will do is make it more difficult to get back those people who voted Ukip as a protest. This is therefore a very serious matter.”

Another source on the Conservative board said the remarks were “horrifying but not surprising” because they fitted a pattern of “complete contempt” with which the party leadership treated the grassroots.

“These are people who give up their lives for the party,” the source said.

“There has to be some definitive action from the party leader. It is his party. He leads it. He is there because we put him there.”

Lord Howe, the former chancellor, claimed Mr Cameron was “losing control” of the party to growing euroscepticism. Writing in the Observer he said: “The Conservative leadership is in effect running scared of its own backbenchers, let alone Ukip, having allowed deep anti-Europeanism to infect the very soul of the party.”

Emma Pidding, chairman of the National Conservative Convention, the voluntary wing of the party, said she and several colleagues would support Lord Feldman in the board meeting.

The Tory activist said she had phoned Lord Feldman personally on Saturday to ask him about the allegations and would give him her “absolutely full confidence and backing”.

A 31-year-old man has been gunned down and killed in a Hove street.Two others were shot at during the attack in Church Road at around 11:30pm last night.
Police are treating the shooting as a murder and two attempted murders.
Church Road remains closed this morning while forensics officers examine the scene.
The victim, who was from Kent, was fatally shot by a man as both of them were walking near the junction with Selborne Road.
Detective Chief Inspector Ian Pollard, from the Surrey & Sussex Major Crime Team, is leading the investigation.
He said: "The victim was in the street when he was shot in the body at about 11.30pm on Saturday. He was treated at the scene before being taken to the Royal Sussex County Hospital where he sadly died in the early hours.
"Two other men, who were with the victim, were also shot at by the man as they walking in the street. We are therefore treating this as a murder and two attempted murders.
"Officers and staff from the Neighbourhood Policing Team are in the local area to assist the investigation and to speak to residents who may be concerned or worried.
"I recognise that the murder will be of considerable concern to the people of Brighton & Hove but I can assure them that this is an isolated incident. I have committed a number of resources to this investigation in an effort to find those responsible and bring them to justice.