EU crisis talks

EU Summit abandons EU-wide treaty change

BBC,

9 December, 2011

Attempts to get all 27 EU states to back changes to the bloc's treaties to tackle the eurozone crisis have failed.

Speaking after long talks in Brussels, French leader Nicolas Sarkozy said the 17 eurozone states and other EU members would work on a separate pact instead.

France and Germany are pushing for tough new budgetary rules to be enshrined in the accord.

But UK Prime Minister David Cameron said Britain could not accept a new treaty without certain safeguards.

"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."

A decision to press ahead without changing EU treaties does have benefits for the eurozone bloc, because it is likely to be less time-consuming, the BBC's Andrew Walker in Brussels says.

Discussions are due to resume shortly.

Before the announcement, world shares fell after the European Central Bank ruled out any substantial aid for indebted nations.

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.

'No two-speed EU'

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.

David Cameron: It is better to have eurozone countries make arrangements separately

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.

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.

They also said a ceiling on the size of the eurozone's bailout would be capped at 500bn euros (£427bn; $666bn).

Germany and France had been pushing for changes to the EU treaty, saying stricter fiscal rules should be made part of basic EU law.

As German Chancellor Angela Merkel arrived at the summit, she told journalists: "The euro has lost credibility and that needs to be restored."

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."