Early this morning the EU leaders came to a decision. The Eurozone will continue, but they’ll no longer have the support of Britain (and her pound).
But the new plan, which leaders are aiming to have ready by March, did not get the backing of Britain and three other countries.
“We would rather have reformed the treaty with 27 members,” Sarkozy said. But Prime Minister David Cameron of Britain demanded an “unacceptable” opt out clause related to the financial services sector, Sarkozy said.
The British waiver would have “undermined a lot of what we’ve done to regulate the financial sector,” Sarkozy said. Instead, the eurozone countries, along with “anyone who wants to join us,” are pushing ahead with the new intergovermental treaty, he said.
“What is on offer isn’t in Britain’s interests, so I didn’t agree to it,” Cameron said at a briefing.
The new deal may raise concerns of the EU turning into a two-tier system, with some countries pursuing deeper integration than others.
In other words, Britain realizes that the pound has more value than the Euro (in part due to the fact that some of their coins are made of silver). Britain wanted to be exempt from some of the financial regulations the rest of the Eurozone will be engaging in, including some serious IMF handouts:
In a meeting billed as a last chance to save the euro, with financial markets unconvinced by policymakers’ efforts to tackle the region’s problems so far, the leaders also took several critical decisions on the permanent bailout fund, the European Stability Mechanism, which will come into force in July 2012.
The ESM’s capacity will be capped at 500 billion euros ($666 billion), less than had been suggested was possible before the summit, and the facility will not get a banking license, as Van Rompuy originally had proposed, due to German opposition.
It also was agreed that EU countries would provide up to 200 billion euros in bilateral loans to the International Monetary Fund (IMF) to help it tackle the crisis, with 150 billion euros of the total coming from the euro zone countries.
“We can be very pleased at the result,” IMF Managing Director Christine Lagarde said as she left the summit.
Polish Prime Minister Donald Tusk admits that “I’m not sure” if the Euro is safe now.
The 27 EU presidents and prime ministers began their talks at 7:30 Thursday evening and continued past 4:30 a.m.
Despite the hours of discussions, Britain is out, and possibly also three others have decided to stay out.
In the coming weeks, Britain may find itself even more isolated. Sweden, the Czech Republic and Hungary want time to consult their parliaments and political parties before deciding on whether to join the new union-within-the-union.
Maybe the Central Bankers will realize that throwing money at the Eurozone will not fix this problem, but for now it seems that many members of the media are reporting this in a way to make those countries sticking with the European Central Banks in a positive light.