Here are the main points of the European Union Summit agreement, reached in the small hours of Friday after overnight talks.
• Eurozone countries budgets should be balanced or in surplus; this principle will be deemed respected if, as a rule, the annual structural deficit does not exceed 0.5% of gross domestic product.
• A similar rule will also be introduced in eurozone member states’ own national legal systems; they must report national debt issuance plans in advance.
• As soon as a eurozone member state is in breach of the 3% deficit ceiling, there will be automatic consequences, including possible sanctions, unless a qualified majority of eurozone states is opposed.
• The European Stability Mechanism (ESM), the eurozone’s permanent bailout fund, is aimed to enter into force in July 2012; the existing European Financial Stability Facility (EFSF) will remain active until mid-2013. The overall ceiling of the EFSF/ESM of €500bn (£426bn) will be reviewed in March 2012.
• Eurozone and other EU states will confirm within 10 days the provision of funds to the IMF of up to €200bn in the form of bilateral loans to help it deal with the crisis.
• Voting rules in the ESM will be changed to allow decisions by a qualified majority of 85% in emergencies, although that remains subject to confirmation by the Finnish parliament.
Britain did not sign up to this agreement – because they wanted these extra safeguards :-
a) Any transfer of power from a national regulator to an EU regulator on financial services would be subject to a veto.
b) Banks should face a higher capital requirement.
c) The European Banking Authority should remain in London. There were suggestions that it might be consolidated in the European Security and Markets Authority in Paris.
d)The European Central Bank be rebuffed in its attempts to rule that euro-denominated transactions take place within the eurozone.
The decision by David Cameron will transform Britain’s relations within the EU. Other projects, such as the euro currency and the creation of the passport-free travel area, have gone ahead without British involvement. But it is the first time since Britain joined in 1973 that a treaty that strikes at the heart of the workings of the EU will be agreed without a British signature.