“It’s interesting to note that 20 years later we have realized — we have succeeded — in creating a more stable foundation for that economic and monetary union,” Mrs. Merkel said, adding, “and in so doing we’ve advanced political union and have attended to weaknesses that were included in the system.”

Sadly David Cameron had to plung Britain's position in Europe into the greatest uncertainty in a generation as he used his veto to block a new EU-wide treaty and left at least 23 other countries to forge a pact to salvage the single currency. Although it was first thought to be a veto, but it has transpired that it was not a veto as the other 26 members are going to do it anyway.

The agreement was a clear victory for Mrs. Merkel, and it prompted a sharp rally in stock markets in Europe and the United States. But it is viewed as unlikely to calm fears that Europe is unwilling to muster the financial firepower to defend the sovereign debts of big member states, including Italy and Spain, that have little or no economic growth and have big debt bills coming due soon.

At the meeting, member governments agreed to raise up to $270 billion that could be used by the International Monetary Fund to aid indebted European governments, and they moved up the date that a European rescue fund would come into operation. But the sums involved fell well short of what many investors and some Obama administration officials have argued are needed to ensure the survival of the euro. Administration officials on Friday welcomed the long-term overhaul of the euro zone’s rules, but argued that stronger measures were needed in the short run.

The big loser in Brussels was Britain, which had endorsed the 1991 Maastricht Treaty on European integration but opted out of the new euro common currency to preserve its economic and monetary independence.

Prime Minister David Cameron, is perceived outside UK to be a a Conservative and self-acknowledged “euroskeptic,” was isolated in his refusal to allow the German prescription of “more Europe” — to give teeth to fiscal pledges underpinning the euro.

Mr. Cameron was also perceived as having made a poor gamble in opposing the push by Mrs. Merkel and President Nicolas Sarkozy of France, embittering relations and possibly damaging his standing at home. Though some other countries, including Denmark and Hungary, initially shared Britain’s skepticism of the German-led agreement, only Britain ultimately rejected it.

With the apparent blessing of the pro-European deputy prime minister, Nick Clegg – and the subsequent delight of Tory backbenchers – Cameron deployed the ultimate weapon in European summitry at about 2.30am yesterday.