Eurozone deal lacks 'firepower'

VIENNA: A summit deal struck by all EU countries except Britain lacks the necessary "firepower" to tackle the underlying causes of the eurozone crisis, Austrian Chancellor Werner Faymann said Saturday.

"A firewall was created, but it is not strong or large enough to have a big deterrent effect on speculators and the financial markets in the coming years," Faymann told the Salzburger Nachrichten daily in an interview.

"The decisions taken lack the necessary firepower to have a sustained effect."

Prime Minister David Cameron said Britain will not be excluded from the European Union for opting out of a treaty aimed at saving the euro, but its relationship with the bloc has changed.

"We are not being excluded, we are in the European Union, we're a leading member of the single market," Cameron told British broadcasters after a summit in Brussels.

"When it comes to defence, we're the leading (EU) member of NATO, when it comes to driving forward European foreign policy, we're actually one of the leading players in that.

"But no we're not in the single currency, we don't want to be in the single currency, we're not in the Schengen no-borders agreement and I'm glad we're not in that."

Cameron blocked an EU-wide treaty on tighter budget policing overnight, saying that it would have threatened Britain's vital financial services sector in the City of London.

But afterwards the other 26 members of the EU said they were willing to join a "new fiscal compact" to resolve the two-year euro debt crisis, leaving Britain in the cold in Europe.

"In terms of the future, yes of course this does represent a change in our relationship with Europe," Cameron said.

"But the core of our relationship -- the single market, the trade, the investment, the growth, the jobs that we want to see -- that remains as it was."

Austria's Fayman said that the agreement made in Brussels on Friday on tighter budget discipline was a "large step on the path towards more independence from financial markets and (sovereign bond) creditors."

But he added: "What is missing are financial market regulations, a European rating agency (and) European revenues from financial markets through a tax on financial transactions."

The summit ended with 26 of the 27 member states signalling their willingness to join a "new fiscal compact" after Britain vetoed having tough new budget rules enshrined in a modified EU treaty, as pushed by Germany and France.

Faymann said that British Prime Minister David Cameron's negotiating tactics at the summit "were in blatant contradiction to the spirit, and the team spirit, of the European Union."

The pact, due to be finalised in March, includes plans to impose near-automatic sanctions on countries running excessive deficits and gives Brussels greater powers overseeing national budgets.

Leaders hope the pact will convince the European Central Bank to drop its reluctance to use its full arsenal against the crisis, with the Frankfurt institution seen as the beleaguered eurozone's best hope.

The 17 eurozone countries signed up to the pact while nine other non-euro EU nations "indicated the possibility to take part in this process" after consulting their parliaments, EU leaders said in a statement.

Hungary had originally voiced reluctance, while Sweden and the Czech Republic were undecided.