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UK alone as EU agrees fiscal deal UK alone as EU agrees fiscal deal
(40 minutes later)
All the countries of the European Union except the UK have backed a tax and budget pact to tackle the eurozone debt crisis, say European leaders.All the countries of the European Union except the UK have backed a tax and budget pact to tackle the eurozone debt crisis, say European leaders.
Hungary originally said it would also remain outside the deal but has now changed its stance.Hungary originally said it would also remain outside the deal but has now changed its stance.
Other countries outside the 17-member eurozone have agreed, some pending consultations with their parliaments.Other countries outside the 17-member eurozone have agreed, some pending consultations with their parliaments.
UK Prime Minister David Cameron had insisted on an exemption for the UK from some financial regulations.UK Prime Minister David Cameron had insisted on an exemption for the UK from some financial regulations.
The UK effectively used its veto to block an attempt, led by the French and Germans, to get all 27 EU states to support changes to the union's treaties.The UK effectively used its veto to block an attempt, led by the French and Germans, to get all 27 EU states to support changes to the union's treaties.
Instead, eurozone members and others will adopt an accord with penalties for breaking deficit rules. It will be backed by a treaty between governments, not an EU treaty.Instead, eurozone members and others will adopt an accord with penalties for breaking deficit rules. It will be backed by a treaty between governments, not an EU treaty.
'Stable euro''Stable euro'
"In fact, 26 leaders are in favour of joining this effort. They recognise the euro is a common good," said European Council President Herman Van Rompuy."In fact, 26 leaders are in favour of joining this effort. They recognise the euro is a common good," said European Council President Herman Van Rompuy.
But Mr Cameron said he had not signed up to the deal because it was not in Britain's interests.But Mr Cameron said he had not signed up to the deal because it was not in Britain's interests.
"Those countries that sign this treaty... we wish them well because we want the eurozone to sort out its problems, to achieve that stability and growth that all of Europe - Britain included - needs," he said."Those countries that sign this treaty... we wish them well because we want the eurozone to sort out its problems, to achieve that stability and growth that all of Europe - Britain included - needs," he said.
German Chancellor Angela Merkel said the UK was the only country to have expressed reservations, but that Mr Cameron had recognised that a stable euro was in Britain's interest.German Chancellor Angela Merkel said the UK was the only country to have expressed reservations, but that Mr Cameron had recognised that a stable euro was in Britain's interest.
Of the nine other EU countries outside the euro, Hungary, the Czech Republic and Sweden have said they must consult their parliaments. Six others - including Denmark, Poland and Latvia - have agreed to join the new deal.Of the nine other EU countries outside the euro, Hungary, the Czech Republic and Sweden have said they must consult their parliaments. Six others - including Denmark, Poland and Latvia - have agreed to join the new deal.
EU leaders aim to have the pact - known as a "fiscal compact" - ready to take effect by March.EU leaders aim to have the pact - known as a "fiscal compact" - ready to take effect by March.
Its main provisions include:Its main provisions include:
  • a cap of 0.5% of GDP on countries' annual structural deficits
  • "automatic consequences" for countries whose public deficit exceeds 3% of GDP
  • the tighter rules to be enshrined in countries' constitutions
  • the EU's permanent bailout facility, the European Stability Mechanism (ESM), to be accelerated and brought into force in July 2012
  • the adequacy of 500bn-euro (£427bn; $666bn) limit for the ESM to be reassessed
  • eurozone and other EU countries to provide up to 200bn euros to the International Monetary Fund (IMF) to help debt-stricken eurozone members
  • a cap of 0.5% of GDP on countries' annual structural deficits
  • "automatic consequences" for countries whose public deficit exceeds 3% of GDP
  • the tighter rules to be enshrined in countries' constitutions
  • the EU's permanent bailout facility, the European Stability Mechanism (ESM), to be accelerated and brought into force in July 2012
  • the adequacy of 500bn-euro (£427bn; $666bn) limit for the ESM to be reassessed
  • eurozone and other EU countries to provide up to 200bn euros to the International Monetary Fund (IMF) to help debt-stricken eurozone members
The BBC's Europe editor Gavin Hewitt, in Brussels, says the new pact will be quicker to set up than a change to the treaty but it may prove less rigorous.The BBC's Europe editor Gavin Hewitt, in Brussels, says the new pact will be quicker to set up than a change to the treaty but it may prove less rigorous.
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.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.
Nearly 10 hours of talks could not produce an agreement involving all member states.Nearly 10 hours of talks could not produce an agreement involving all member states.
French President Nicolas 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.French President Nicolas 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.
IMF chief Christine Lagarde welcomed the deal as "a really good step in the right direction".IMF chief Christine Lagarde welcomed the deal as "a really good step in the right direction".
But the announcement from Brussels failed to lift the markets, which are still hoping for more intervention by the European Central Bank (ECB), and European stocks traded slightly down on Friday.But the announcement from Brussels failed to lift the markets, which are still hoping for more intervention by the European Central Bank (ECB), and European stocks traded slightly down on Friday.