EU leaders have failed in a bid to make changes to the treaties which govern the European Union, a move which was seen as the best hope of rescuing the Eurozone from its current difficulties.
Britian blocked an agreement that would apply to all 27 members of the EU because it could not win concessions protecting the revenues of the City of London. The British Prime Minister, David Cameron, also balked at not winning guarantees for British sovereignty under the new EU structures France and Germany were demanding.
There remains a suspicion that because Cameron could not bring back a clear "British win" the political dangers for him of signing a treaty outweighed any desire to show European solidarity.
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The Eurozone countries together with 7 countries not using the single currency have instead made separate agreements between themselves to coordinate the budget making process.
The heads of government meeting in Brussels also agreed to add €200bn to the bail out funds designed to support distressed European countries.
In a separate move the euro-area countries reduced the impact for the private sector in future bail outs. This is essentially a fillip for European banks with heavy exposures to Southern Europe
The effect on debt markets has been significant with the interest rate on 10 year loans to the Italian government rising 12.3 basis points to 6.581%. French yields climbed 3.5bp to 3.392% while Spanish 10 year bonds climbed 9.4bp to 5.908%.
On equity markets the reaction has been more positive. European news organisations have not been placing so much emphasis on Britain's veto and have instead focused on what was achived as opposed to what was not. At 8:34am in London these were the movements on the European bourses
CAC 40 + 0.31%
DAX 30 -0.09%
IBEX 35 +0.19%
FTSE MIB +0.85%
The Euro has fallen against the dollar this morning by 0.0498% to $1.3334
BS
