After strenuous negotiations, 23 of the 27 nations of Europe agreed to government spending and borrowing caps to be outlined in a new pact—but a unified treaty was blocked by Britain. Negotiations broke down largely over London's demands for future protection from financial regulations forged by France and Germany. Hungary also refused to sign the accord, and Sweden and the Czech Republic required more time to discuss the issues with their parliaments, reports the Washington Post. British Prime Minister David Cameron said ceding so much control over Britain's budget is "not in my national interest." The intergovernmental pact, with details to be hammered out in the coming months, includes all 17 nations that use the euro, and will include stiff penalties for big-spender countries and up the resources for nations in fiscal trouble. It could be ratified much more quickly by parliaments than a full EU treaty amendment, notes the New York Times.
"We are doing everything we can to save the euro," French President Nicolas Sarkozy said today. Under the agreement, an extra $268 billion will be made available to the International Monetary Fund, while the current temporary bailout fund of $590 billion will remain in place. In addition, the plan to add an additional $670 billion will be moved up by a year, according to the Post. The head of the European Central Bank hailed the agreement reached early today as a "very good outcome for euro members," but it remains to be seen if investors are reassured. Stocks fell sharply in Asia on the news.