Brussels Working almost to exhaustion and persuading countries one by one, European leaders agreed Friday to redefine their continent — hoping that by joining their fiscal fortunes they might stop a crippling debt crisis, save the euro currency and prevent worldwide economic chaos.
Only one country said no: Britain. It will risk isolation while the rest of the continent plots its future.
The coalition came together in a marathon negotiating session among the 27 European Union heads of government — hard bargaining that began with dinner Thursday evening and ended after 4 a.m., when red-eyed officials appeared before weary journalists to explain their proposed treaty.
It was a major step forward in the long, postwar march toward European integration. It was two decades ago, on Dec. 9 and 10, 1991, that European negotiators drafted a treaty in Maastricht, Netherlands, to unite their politics, create a central bank and, one day, invent a common currency.
Friday’s agreement — 23 countries are in favor and three more say they are open to the idea — would force countries to submit their budgets for central review and limit the deficits they can run.
The hope is that it will stem a crisis over sovereign debt that consumed Greece, spread to Ireland, Italy, Portugal and Spain, and threatens to explode into a worldwide financial crisis capable of pushing the global economy into recession.
“This is the breakthrough to the stability union,” German Chancellor Angela Merkel said. “We are using the crisis as an opportunity for a renewal.”
To prevent excessive deficits, countries in the treaty will have to submit their national budgets to the European Commission, the executive body of the EU, which will have the power to send them back for revision.
They must also bring their budgets close to balance. Except in special circumstances, the budget deficit of a country won’t be able to exceed 0.5 percent of gross domestic product, the amount of goods and services produced by its economy. An unspecified “automatic correction mechanism” would punish the rule-breakers.
Germany and France insist that fiscal union is the best way to regain market trust, badly shaken by the escalating financial crisis. Most economists think it will not be enough.
They say the euro countries also need enough money to guarantee that they can pay the massive debts that have resulted from running budget deficits year after year. Euro leaders put off until March a decision on whether to provide money on top of a €500 billion, or $668 billion, bailout fund for euro countries.
European leaders did agree to add €200 billion to the International Monetary Fund to help ailing countries.
Only 17 of the 27 European Union countries use the euro currency, and its stability has been threatened by the massive national debts of some of those 17. All but two of the 10 non-euro countries — Britain and Denmark — are committed to adopting it eventually.
The countries that use the euro found they had friends among those that do not. At least six and as many as nine non-euro countries are willing to bind themselves to the euro countries in a pact aimed at having their economies converge.
Britain said no for two reasons: Prime Minister David Cameron’s Conservative Party includes a strong anti-EU element, and Cameron, despite trying deep into the night, failed to win an exemption from regulation of the British financial industry.
The other leaders would have none of it: Bankers and lack of regulation are viewed on the continent as a prime cause of the financial crisis.
“What was on offer is not in Britain’s interest, so I didn’t agree to it,” Cameron said. “We’re not in the euro, and I’m glad we’re not in the euro. 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.”
Britain, which prides itself on its fierce independence, joined the then-European Economic Community in 1973 — only after French President Charles de Gaulle, who had vetoed the U.K.’s membership along with Germany’s leader, fell from power.
Since then, it has retained a frosty skepticism toward the ambitions of France and Germany to forge ever closer political and fiscal ties. It eschewed both the euro and the Schengen open borders policy, fearful of losing power to determine its own fate.
French President Nicolas Sarkozy blamed the British leader for scuttling what could have been an EU-wide treaty. He said Cameron’s exemptions for British finance “seemed to us unacceptable.”
Some countries may face parliamentary opposition to the pact, which would allow for unprecedented oversight of national budgets.