The first thing that gets overlooked is that groupings in the European Parliament tend to be very broad churches because the member parties come from quite disparate political circumstances. The groupings are largely vehicles of convenience designed to strengthen the individual parties' position and enable them to do more than they could achieve in isolation. So individual parties are frequently able to put up with a lot of ideological disagreement without taking themselves into the wilderness.
It's also worth noting, as Nicholas Whyte does in his good post From the Heart of Europe: Fianna Fáil and the liberals, that being in a grouping confers potential benefits beyond the Parliament itself:
In addition, the growing importance of the pan-European parties as political vehicles is starting to rub. At the height of his powers, Bertie Ahern was being talked about for one of the top EU jobs. Although that prospect seems much less likely today, the fact is that the internal dynamics of EU politics meant that no FF candidate could ever be a serious runner in the first place. FF's current political grouping is fourth in the pecking order, a long way behind the Liberals, who themselves are not exactly snapping at the heels of the Socialists or the EPP.Nicholas's full post is worth a good read as it traces the history of a major conservative~ish party (in so far as Fianna Fáil has any core ideology) sitting outside the European People's Party (in their case because Fine Gael blocked entry) and having to make alliances with either the products of temporary divisions in other country's rights (e.g. the French Gaullists or Forza Italia) or the flotsam and jetsam of politics, the latter of whom are not exactly the best bedfellows:
It was all very well to be in with the Gaullists, but times have changed; when the two largest delegations in your group are the Italian post-fascists [Alleanza Nazionale] and the Kaczyński twins [the Polish Prawo i Sprawiedliwość - Law and Justice], you may want to start thinking about moving.Fianna Fáil has finally managed to join the Liberals, despite not being a liberal party. (Once again this is partially down to the repercussions of the domestic politics of a country - in this case Ireland's liberal party, the Progressive Democrats, have just collapsed and so removed the main veto wielder on Fianna Fáil's application.)
Now whilst Fianna Fáil itself has always been a very unlikely candidate for this proposed Eurosceptic Conservative grouping, its problems are indicative of the calculations that many parties make when choosing their grouping, invariably gravitating towards the largest blocks who offer influence and jobs. Tiny groups on the fringe offer only ideological purity or a temporary berth whilst waiting to get into a larger group. This does not bode well for any attempt to lure other parties out of the European People's Party.
And British-style conservatism is not that popular in Europe - the Czech Civic Democrats are a very rare example of a major party who truly are a mirror image of us. In most countries the main centre-right option is Christian Democracy, and it is the differences between Christian Democracy and British-style Conservatism that are at the root not only of our long term uneasy relationship with the EPP (remember that some two decades ago it was the EPP who were sceptical about our caucusing with them, not the other way round) but indeed with the EU project as a whole, a project that is very much a Christian Democrat one. The result is that there are very few natural allies for the Conservatives in a separate grouping, a problem compounded by the requirement to have members from at least six or seven different member states, and several of the parties already in smaller groups are not exactly comfortable bedfellows.
So I predict that this proposed new grouping will struggle to get the numbers needed to be a recognised party and that once more attention is focused on the flotsam and jetsam that is the only alternative then the entire project will collapse. This leaves only two options, only one of them viable, for the Conservatives in the European Parliament.
One theoretical option is to not sit as any party as all but to sit as independent "non-inscrits". The idea that a serious major party of government in any member state would sit totally in isolation in the European Parliament is laughable. Much is made by Conservative critics of sitting with the EPP of the position of Roger Helmer and Daniel Hannan in sitting as non-inscrits after being expelled from the EPP. But can anyone tell me what either has actually achieved? I don't mean what speeches they've been able to make, I mean what difference have they made to the output of the European Parliament from their position?
And so this will leave only one realistic option - begrudgingly return to sitting with the European People's Party, with all the previous measures negotiated to give even a fig leaf of separation (the whole notional "European Democrats" grouping) lost.
Now frankly there's been far too much time spent in the party rowing about this issue. But the situation is far more complicated than many of the extremists have claimed it is, and so the outcome is not going to be the most optimum one. And rowing about it even more is not going to make the slightest difference.