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Euro crisis: EU-wide treaty change bid fails Euro crisis: EU-wide treaty change bid fails
(40 minutes later)
Attempts to get all 27 EU states to back changes to the bloc's treaties to tackle the eurozone crisis have failed. Most European Union members have agreed to press ahead with a pact to tackle the eurozone debt crisis.
Speaking after long talks in Brussels, French leader Nicolas Sarkozy said the 17 eurozone states and other EU members href="http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/126658.pdf" title="European Council statement" >would work on a separate pact instead. A German and French attempt to get all 27 EU states to back changes to the EU's treaties was dropped over objections from the UK.
France and Germany are pushing for tough new budgetary rules to be enshrined in the accord. At least 23 countries will forge ahead href="http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/126658.pdf" title="European Council statement" >with a new accord with strict penalties for those who break rules on deficits.
But UK Prime Minister David Cameron said Britain could not accept a new treaty without certain safeguards. UK Prime Minister David Cameron said he had not signed up to the pact because it was not "in Britain's interests".
"We wish them [eurozone states] well because we want everyone to sort out their problems because we all need that [economic] growth," he said."We wish them [eurozone states] well because we want everyone to sort out their problems because we all need that [economic] growth," he said.
"But at the end of the day I made my judgment that it was not in Britain's interests [to take part]. I effectively wielded the veto.""But at the end of the day I made my judgment that it was not in Britain's interests [to take part]. I effectively wielded the veto."
A decision to press ahead without changing EU treaties does have benefits for the eurozone bloc in that it is likely to be less time-consuming, the BBC's Andrew Walker in Brussels says. The new tougher rules on spending and budgets will now be backed not by an EU treaty but by a treaty between governments. It will be quicker to set up but it may prove less rigorous, says the BBC's Europe editor Gavin Hewitt in Brussels.
But, he says, Europe has taken a big step towards closer integration, with binding rules over tax and spending, and sanctions against countries that overspend.
Discussions on the details of the new fiscal arrangement are due to resume shortly.Discussions on the details of the new fiscal arrangement are due to resume shortly.
What Britain came here wanting to make sure was that it could safeguard its interests within the context of any treaty change. When David Cameron couldn't get movement on that, or a veto on any treaty change, he said he was going to opt out. There is now a two-speed Europe - after this long night, the French president accepted that.
Now Hungary appears to be with Britain on this at this stage, Sweden and the Czech Republic are saying they have not yet decided. There is, too, considerable antagonism towards Britain - it used its veto in what is seen in Brussels as Europe's hour of need.
But in terms of Britain and other members of the EU that are outside the eurozone versus the eurozone, that's not quite the correct characterisation because it appears that the eurozone members will be joined by quite a substantial number of other members of the EU who don't yet use the euro in signing up to these new rules governing the way they run their economies. What is unclear is whether European institutions can be used to implement a treaty between governments.
So in that sense there's a very small club including Britain and Hungary on the one hand and then most of the other members of the European Union on the other. If EU officials are in the room, David Cameron has already laid down a marker that he expected the UK to be involved. It is all a recipe for further tussles.
Before the announcement, world shares fell after the European Central Bank ruled out any substantial aid for indebted nations. The big question is what effect all this will have on the eurozone crisis. The main impact will lie in the long-term - the agreement has little to say about the debt mountains and the absence of growth in most of Europe.
The US Dow Jones index closed down 1.6%. French and Italian shares ended down 2.5% and 4.3% respectively. Shares on Asian markets opened lower on Friday. European stocks opened slightly down on Friday on news of the announcement.
'No two-speed EU' German praise
Nearly 10 hours of talks could not produce an agreement involving all member states. Instead, the 17 members of the eurozone will work on a separate deal outside EU treaties. They will be joined by at least six and possibly eight other countries.Nearly 10 hours of talks could not produce an agreement involving all member states. Instead, the 17 members of the eurozone will work on a separate deal outside EU treaties. They will be joined by at least six and possibly eight other countries.
The UK and Hungary will play no part in a new inter-governmental treaty, while Sweden and the Czech Republic will consult their parliaments before making a decision. The UK and Hungary will play no part in a new inter-governmental agreement, while Sweden and the Czech Republic will consult their parliaments before making a decision.
Mr Sarkozy said the sticking point had been Mr Cameron's insistence on a protocol allowing London to opt-out on proposed change on financial services.Mr Sarkozy said the sticking point had been Mr Cameron's insistence on a protocol allowing London to opt-out on proposed change on financial services.
"We could not accept this," he said."We could not accept this," he said.
Mr Sarkozy said the new deal should be agreed by March.Mr Sarkozy said the new deal should be agreed by March.
But he denied suggestions that the new treaty would lead to a two-speed EU.
During the talks, eurozone leaders agreed to work on tough new budgetary rules, which envisage automatic penalties.During the talks, eurozone leaders agreed to work on tough new budgetary rules, which envisage automatic penalties.
They also said a ceiling on the size of the eurozone's bailout would be capped at 500bn euros (£427bn; $666bn).They also said a ceiling on the size of the eurozone's bailout would be capped at 500bn euros (£427bn; $666bn).
The German Chancellor, Angela Merkel, praised the plan and said it would contribute to securing the euro.The German Chancellor, Angela Merkel, praised the plan and said it would contribute to securing the euro.
"I believe that after long negotiations this is a very, very important result because we have learned from the past and from mistakes and because in future [there will be] binding decisions, binding rules, more influence from the commission, more community and with that higher coherence.""I believe that after long negotiations this is a very, very important result because we have learned from the past and from mistakes and because in future [there will be] binding decisions, binding rules, more influence from the commission, more community and with that higher coherence."
The head of the European Central Bank, Mario Draghi, said the accord would lead to much more discipline in economic policy, calling it "a very good outcome for the euro area".
Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms:
AAA-rating The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is minuscule. Glossary in full		 Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms:
AAA-rating The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is minuscule. Glossary in full
Germany and France had been pushing for changes to the EU treaty, saying stricter fiscal rules should be made part of basic EU law. The head of the European Central Bank (ECB), Mario Draghi, said the accord would lead to much more discipline in economic policy, calling it "a very good outcome for the euro area".
As German Chancellor Angela Merkel arrived at the summit, she told journalists: "The euro has lost credibility and that needs to be restored." Our correspondent says the immediate test will be whether this agreement persuades the ECB to act more aggressively in the markets and so lower the borrowing costs of troubled countries like Italy and Spain.
She said the European Commission and the European Court of Justice would have more powers in future to enforce the rules, declaring: "We must make clear that we accept more co-ordination."
Can the summit resolve the EU crisis? Are you in the eurozone? Please send in your reaction using the form below.Can the summit resolve the EU crisis? Are you in the eurozone? Please send in your reaction using the form below.