UK refuses to sign Merkel-led fiscal treaty

The United Kingdom was one of only two of the 27 EU member states to refuse to sign a fiscal treaty on budget discipline last night.

The Czech Republic also refused to sign up to the treaty, which will empower the European Court of Justice to monitor compliance and impose fines on rule-breakers.

Prime Minister David Cameron said his government would act if it felt the treaty threatened UK interests.

He said "legal concerns" remain about the use of EU institutions in enforcing fiscal rules.

Germany - the eurozone's biggest lender - was instrumental in putting together the binding treaty which it hoped would be adopted by all EU members.

Cameron, under pressure from his cabinet and other MPs, used his veto last month to opt out of the treaty, arguing the UK should keep its authority over financial services in the City of London.