Most of the members of the European Union agreed to a new "intergovernmental agreement," with strict budget rules and financial safeguards, but the United Kingdom has effectively torpedoed the deal as a threat to its national sovereignty.
RELATED: The Euro and Europe: Perfect Matches After All
The new non-treaty treaty would require member countries to submit their budgets to the European Union, which would have the power to demand changes or punish those nations that don't have balanced budgets. The hope was that all 27 members of the EU would agree to the terms in the hope of stabilizing the debt crisis in the euro zone and bringing offending countries in line with the rest of the region.
RELATED: Greece and Its International Financiers Have a Deal
However, UK Prime Minister David Cameron refused to sign on to the deal saying it did not provide enough protection for London's financial services industry. Cameron insisted that Britain — which does not use the euro — be given the option to withdraw from certain provision if necessary. "Without those safeguards it is better not to have a treaty within a treaty, but have those countries make their arrangements separately," said Cameron. Sweden, Hungary and the Czech Republic, which are not on the euro, also refused to sign on to the deal for now. Cameron also questioned whether the strict budget rules could even be enforced across the whole region.
RELATED: How David Cameron's Date with America Is Going
The 17 nations that do use the euro (and several others that hope to some day) could still sign their own accord that would impose those budget restrictions on those who use the currency. The "intergovernmental agreement" would not be a formal treaty, so it could be ratified more quickly and would not require any changes to the main European Union treaty. The deal earned the support of the European Central Bank.
RELATED: British Political Leaders Are Just Like Us
The truth is that as long the UK holds on to the British pound, its interests will never truly be aligned with the other euro zone countries. The ability to print its own money means that it doesn't need to follow the same strict austerity path that countries like Greece and Italy are being forced down. There's also the matter of the British government allowing the leaders of France and Germany to sign off on its own internal politics, a notion most Brits find unacceptable. In fact, it's moments like this are the reason they never joined the euro in the place and the reason Cameron insisted, once again, that it will never happen.
"We're not in the euro and I'm glad we're not in the euro," he said. "We're never going to join the euro and we're never going to give up this kind of sovereignty that these countries are having to give up."