David Cameron has refused to sign a new fiscal treaty, despite the agreement of 25 of the EU’s 27 member states.
The treaty, which enforces budget discipline, aims to restore confidence in the future of the Eurozone in a bid to restore economic growth and jobs.
The prime minister said: “There were insufficient safeguards for the future working of the EU single market as well as regulations would affect the City of London.”
Herman Van Rompuy, the newly reappointed President of the European Council, said: “The targets on deficits and debts are intermediate targets, no aim in itself.” He gave special importance to the coordination between all the EU members, adding: “The treaty contains a commitment to deepen economic coordination and it provides the tools to do so.”
The UK and the Czech Republic are the only EU countries not to have signed the treaty, known as “the fiscal content”.
Czech Prime Minister Petr Necas said questions over some of the treaty’s text and uncertainty over its ratification at home had prevented him from committing to it.