10 Dec 2011

European leaders agree on debt deal, Britain stands alone

4:37 pm on 10 December 2011

All European Union countries apart from Britain have agreed in principle to a deal they hope will restore confidence in the debt-ridden eurozone.

A statement from the EU says Hungary, which was initially thought to be opposed, has joined 25 other countries in backing the agreement, subject to approval by its parliament.

However, the deal will not take the form of a full EU treaty because Britain refused to take part.

Instead, eurozone members and others will adopt an accord with penalties for breaking deficit rules which will be backed by a treaty between governments, the BBC reports.

International Monetary Fund chief Christine Lagarde says the measures agreed to are an important contribution to addressing the crisis facing the eurozone and strengthening the global economic recovery.

The deal envisages new limits on government borrowing and more vigorous enforcement in an attempt to address the concerns in financial markets about the sustainability of the debts of some governments.

European Commission president Jose Manuel Barroso says the treaty is in the interests of the eurozone and beyond.

He says work will now begin on finalising the details of the pact.

The agreement has also been welcomed by the White House as a positive development.

British PM defends decision to stay out

British foreign secretary William Hague is denying that Britain has been left isolated from the rest of Europe by refusing to sign up.

Mr Hague says Britain will remain fully involved in EU decision making on many subjects.

However, he says the British government is not willing to cede more economic sovereignty to Brussels and wants to protect London's financial sector from more regulation.

German Chancellor Angela Merkel says she regrets Britain's decision but Prime Minister David Cameron has told her that Great Britain is very much dependent on a stable euro.

Mrs Merkel says the agreement is a tremendous step towards a stable Europe.