We're on our own now! Cameron uses the veto for first time to opt out of new treaty to save the euro and give more power to Brussels

By NICHOLAS PETCHE



European Commission President Jose Manuel Barroso (right) gestures towards David Cameron this morning at the start of the second day of meetings. The first meeting broke up at 5am after Mr Cameron vetoed a change to the European Union Treaty



David Cameron was this afternoon returning from Brussels after sparking a furious debate over Britain's future in the European Union by refusing to sign up to a treaty to save the single currency.

After 10 hours of talks last night, the Prime Minister risked isolation in Europe by wielding Britain's veto to block a new treaty designed to restore economic stability by imposing tougher fiscal discipline on the 17 euro states.

At least 23 - and possibly all 26 - of the other member states are now going ahead with their own agreement on a new 'fiscal compact'.

The Prime Minister entered talks in Brussels promising 'safeguards' to ensure Britain's influence and sovereignty were not diminished by any agreement to save the euro.



Sorry, didn't see you: Sarkozy eases past Cameron as ministers gathered this morning for further discussions on the Euro crisis



Key to his demands was that any transfer of power from a national to an EU regulator on financial services could be vetoed by the UK. He wanted to prevent any EU action that would harm Britain's ability to operate its own regime of regulation for financial services.

European markets responded with calm to the fraught overnight discussions, with shares holding firm and even rising slightly in early trading.



German Chancellor Angela Merkel studiously ignores the Prime Minister as leaders get ready for a group picture at the EU headquarters in Brussels, Belgium



Mr Cameron's deployment of the veto was hailed by jubilant Tory eurosceptics, some of whom made clear that they regard it as the first step towards a looser relationship with the EU, or even outright withdrawal. One MP hailed him for showing 'bulldog spirit'.

Senior Liberal Democrats in the coalition, including Deputy Prime Minister Nick Clegg, insisted they supported Mr Cameron. But there was dismay elsewhere in the party, with MEP Chris Davies accusing the Prime Minister of 'betraying Britain'.



I know you're all tired but smile. Cameron looks into distance (4th from left, back row) EU leaders stand with Croatia's Prime Minister Jadranka Kosor (4th left), President Ivo Josipovic (5th left) and European Council President Herman Van Rompuy (6th left) after the country signed the European Union accession treaty. Croatia is set to become the bloc's 28th member on July 1, 2013.



Mr Clegg said he 'regretted' the failure to reach agreement overnight, but insisted that the coalition Government was 'united' on Mr Cameron's demands for safeguards to protect British interests.

But London Mayor Boris Johnson later told BBC radio that the Prime Minister had 'played a blinder'.

In a dawn press conference, the Prime Minister himself insisted that what he decided was 'the right thing for Britain - a tough decision but the right one'.

He declared: 'I had to pursue very doggedly what was in Britain's interests, which is very difficult in a room where people are pressing you to sign up to things because they say it is in all our interests.'



So, what shall we discuss? Nicolas Sarkozy (left) chats with Angela Merkel and European Commission President Jose Manuel Barroso this morning



What was in Britain's interests, said Mr Cameron, was to win guarantees that in return for backing a 27-nation treaty change, the UK's voice in crucial policy issues on the single market and the financial services sector - vital for the City of London - would not be diminished.

Without such guarantees he could not back the treaty, prompting Germany and France to lead the move to set up a separate agreement to achieve their aims.

French president Nicolas Sarkozy said Mr Cameron had made 'unacceptable' demands for exemptions from certain financial regulations in return for joining in the 'fiscal compact' enshrined in the treaty change.

'We were not able to accept because we consider quite the contrary - that a very large and substantial amount of the problems we are facing around the world are a result of lack of regulation of financial services and therefore can't have a waiver for the United Kingdom,' said Mr Sarkozy.



Come over here: Bulgaria's Prime Minister Boyko Borissov (left) gives a warm greeting to his Croatian counterpart Jadranka Kosor after signing the EU accession treaty of Croatia



source: dailymail