Hungary: UK is alone in staying out of new EU Treaty

"At 5.00am in the morning, you can imagine what a complete mess there was. I talked to people in the room and they had very different accounts of which countries were in and which not," Hungarian EU affairs minister Eniko Gyori told journalists as leaders gathered for the second day of the summit.

She said that Denmark and Bulgaria also want to consult their parliaments, in addition to Sweden and the Czech Republic, which were listed as being inside the new pact in the 5.00am version

"There is a fundamental distinction between the Hungarian and British government. Our Prime Minister had the mandate from the parliament to agree to a treaty amendment, but this is something completely different. We are in favour of stronger rules so that the troubles on the markets cease, as they also affect our economy," Gyori explained.

"My feeling is there will be a framework at [the level of] 26," she added.

The Hungarian government plans to take its time and see what exactly goes into the new EU agreement before it seeks approval from national MPs. But Gyori made clear that any deficit sanctions should cover only the 17 members of the eurozone and not the whole lot. "We have an obligation to join the euro, we want to join, but unfortunately our economic conditions do not allow us to at the moment," she noted.

EU Parliament chief Jerzy Buzek also confirmed there is an EU26 agreement to go ahead, but with a few countries needing to consult parliaments.

"Twenty six versus one. This is a very good result," he said. He compared the situation with the border-free Schengen area, which was initially based on an inter-governmental agreement among five EU countries which later grew to encompass 25 and became EU law.

"The UK is a full member of the EU and we hope it will join this agreement in the future," Buzek added.

Britain said it chose to stay out as the 26 were giving up an element of their "sovereignty" with London having angered France and others over a demand that any treaty change involving all 27 countries should include some guarantees exempting the City of London from financial services regulation.

The Council's legal services - according to EU sources - initially said it would be illegal to bind the ECJ in any formula involving less than the full 27 mmeber states (soon to be 28 after Croatia joins in 2013). "The same person now says it could be done legally," the source said.