David Cameron dramatically vetoed a European Union treaty change today, risking political isolation and forcing the most far-reaching EU shake-up in decades.
At least 23 of the 27 member states are now going ahead with their own treaty to bring in tougher economic sanctions and restore single market credibility and stability.
Only the UK and Hungary were certain today to stay out of the new grouping, with Sweden and the Czech Republic consulting their parliaments before deciding.
But Mr Cameron was unapologetic at a dawn press conference after ten hours of talks at a summit in Brussels.
He said he wished the eurozone well with its new treaty, but the UK could not accept it as the safeguards he had demanded were not on offer.
The Prime Minister declared: “I made my judgment that it was not in Britain’s interests. I effectively wielded the veto.”
Mr Cameron had demanded guarantees that in return for backing a 27-nation treaty change to bring in a new “fiscal compact”, the UK’s voice in crucial policy issues on the single market and the financial services sector would not be diminished. Without these, he refused to back the treaty.
Mr Cameron said the decision to create a new, separate treaty instead of being able to forge a “treaty within a treaty” did not leave Britain isolated.
French president Nicolas Sarkozy said that Mr Cameron had made “unacceptable” demands for exemptions from certain financial regulations in return for joining in the “fiscal compact”.
Mr Sarkozy said: “We were not able to accept [the British demands] because we consider quite the contrary – that a very large and substantial amount of the problems we are facing are a result of lack of regulation of financial services and therefore can’t have a waiver for the United Kingdom.”
European Commission president Jose Manuel Barroso said: “Those that have today approved this new fiscal compact have stated that they want to put it as soon as possible into a new fully-fledged treaty, after revision of the current treaties.
“Having seen it was not possible to get unanimity, it was the proper decision to go ahead at least with those ready to commit immediately. That includes all 17 in the Eurozone, plus some who are not in the euro area but want to take part in this fiscal compact.”
Meanwhile, Mr Cameron insisted the outcome was no cause for a renewal of calls for a referendum in the UK. He said: “This is not going to be a treaty that Britain is signed up to, so I don’t think this is an issue that arises.”