David Cameron has vetoed changes to the treaty designed to tackle the eurozone crisis, saying they were not in the interests of the UK.

Following 10 hours of overnight talks the prime minister said: 'We want the eurozone countries to come together and solve their problems. But we should only allow that to happen within the EU treaties if there are proper protections for the single market, for other key British interests. Without those safeguards it is better not to have a treaty within a treaty, but have those countries make their arrangements separately. It was a tough decision but the right one.'

Foreign secretary William Hague said the treaty would have eroded Britain's sovereignty and described the move as 'very sensible' and would not leave the UK isolated.

French premier Nicolas Sarkozy described Cameron's demands for exemptions for the UK over financial services as 'unacceptable'.

The session did secure the agreement of EU countries to several key elements to tackle the eurozone debt crisis. These include the provision of €200 billion (£171 billion) in bilateral loans to the International Monetary Fund (IMF) to help tackle the debt. Of this sum, €150 billion (£128 billion) will come from the eurozone countries.

In July next year, the European Stability Mechanism (ESM), a permanent rescue system, will come into force and will be capped at €500 billion (£426 billion). However it will not get the banking licence proposed by Herman Van Rompuy of the European Council after German opposition.

A new accord containing tougher taxation and budget rules will now be introduced by eurozone countries. Those signing up will be committing to ensuring that their budgets are balanced or in surplus.

They will also be required to report national debt issuance plans in advance. Additionally, as soon as a euro member state is in breach of the 3 per cent deficit ceiling, there will be automatic consequences, including possible sanctions, unless a qualified majority of euro states is opposed.

Hungary is not expected to sign up, while Sweden and the Czech Republic will consult on the deal.

Commenting on the outcome, German Chancellor Angela Merkel said: 'The British were never part of the euro, they had an opt-out from the beginning, so we are familiar with the situation. We have started Schengen [the agreement] with a number of states and we have said in the text adopted yesterday that if the situation arises in which we can take it up in the treaties with all, as we have done with Schengen, then we will do it as soon as possible.'

She added: 'David Cameron was at the negotiating table with us, we made this decision. We couldn't make a lousy compromise for the euro but we had to set up hard rules...that won't deter Europe from making joint decisions in many other questions, for example when welcoming Croatia as our new member.'

On a more positive note, Christine Lagarde, head of the IMF, said 'We can be very pleased at the result.'

Gary Jenkins from Evolution Securities commented: 'Now it is over to the markets to give their verdict on the latest proposals. In previous summits the instant reaction has been positive but market gains have quickly reversed after a more detailed appraisal of the proposals and also because of the contradictory statements made by officials.

'This time around it appears that the EU proposals are much in line with what was expected, which may disappoint the market. From what we have seen so far, this summit has not produced a silver bullet.'

This was written for our sister website, Interactive Investor