European Union (EU) leaders ended the summit with a historic agreement to draft a new treaty for deeper integration in the euro zone, but analysts and policymakers remained skeptical such long-term steps could solve the crisis that has shaken Europe for two years. While German Chancellor Angela Merkel said she didn't expect leaders would meet again before Christmas, a senior EU official said he thought market pressure would compel them to meet in a room together again sooner rather than later.

The euro slipped early on Monday, safe haven German government bond futures rose and European stock futures were pointing lower, though none of the moves were dramatic. "The moves by the euro zone policymakers are not a damp squib but neither are they the big bazooka hoped for that could really ease market tension for an extended period," said Howard Archer, economist at IHS Global Insight. The euro slipped in Asia on Monday as investors took the view that the EU plan was not the decisive move needed to resolve the debt crisis.

Those steps, together with a leveraged EFSF - the existing bailout fund - are intended to boost help for troubled euro zone countries, such as Italy and Spain, the bloc's third and fourth largest economies, as they muddle through their refinancing crunches. Italy alone has 150 billion euros in debt falling due between February and April of next year.

More than two-thirds of this is devoted to protecting children - via social care and child support - and tackling the crime and anti-social behaviour such families often generate. Police have said that in some cases it would be cheaper to have an officer permanently stationed at a family's home than respond to constant call-outs. The findings come ahead of a major speech later this week by David Cameron in which he is expected to announce new sanctions against such families - combined with what sources describe as 'targeted resources' - as part of his mission to tackle 'broken Britain'.

Researchers devised a seven-point checklist of factors, with families that fulfilled five or more being designated as 'problem'. The criteria include no one in the family being employed, neither parent having any qualifications and being unable to afford certain basic food or clothing items. The research reveals that teenagers raised in such families are 36 times more likely to be excluded from school than children in families with no problems. They are also six times more likely to have been in care, while 63 per cent of boys whose fathers are jailed will eventually be convicted themselves.

Downing Street's determination to deal with problem families has been strengthened by the need to make deep cuts to local authority budgets. One Whitehall source said: 'We simply don't have the money to spare. These families are a drain on local services, which could be much better directed elsewhere. One local police force told us that it would actually be cheaper to have an officer permanently stationed on the family's sofa than have to respond to the constant call-outs to the house.'

'We need to get kids back in the classroom, and to get parents off drugs and on to a work programme to stop them committing crime.' Communities Secretary Eric Pickles said: 'For too long, these families have been locked in a cycle of state dependency. Worklessness has been passed down from generation to generation. Over the years, millions of pounds have been squandered on fruitless, unco-ordinated investment and we can no longer afford to foot the bill.'

David Cameron has received overwhelming support from British voters over his historic decision to veto changes to the EU Treaty. If there was a referendum today on whether the UK should quit the EU, it would be likely to produce a resounding Yes. Nearly 50 per cent say we should go our own way, with 33 per cent in favour of staying in.

Amid the frenetic recriminations following the summit, the poll shows Mr Cameron's dramatic move to set Britain on a separate course from the other 26 nations in the EU is wholeheartedly endorsed by voters. The summit triumph has also wiped out Labour's lead in the opinion polls. Both Labour and the Conservatives are now on 35 per cent, with the Lib Dems on 14. According to the exclusive poll for The Mail on Sunday, nearly two-thirds of voters believe the new EU initiative, designed to save the euro by imposing tough economic controls on bankrupt European countries, is probably a waste of time.

Two in three want a referendum on Britain's future in Europe with just 22 per cent against. Calls for Mr Cameron to press home his advantage and demand that Brussels hands back more powers to London produce an almost identical level of support. The public are in no doubt that despite all the grandstanding by French President Nicolas Sarkozy, Mr Cameron came off best in Brussels. When asked if the Prime Minister had done well from the negotiations, more than half agreed. In comparison, German Chancellor Angela Merkel scored 44 per cent with Mr Sarkozy languishing in third place on 35.

Interestingly, as Britain steps back from Europe, there is growing nervousness at the advance of German influence in the new-look EU. Seven out of ten say the summit has given too much power to Germany - with a mere 13 per cent disagreeing. Nor is the jittery feeling restricted to Britain. Warning of a backlash, an article in leading German newspaper Der Spiegel said: 'We are going to have to put up with a bit of Germanophobia.' Charles Grant, director of the London based Centre for European Reform think tank, said: 'For the first time in the history of the EU, the Germans are now in charge.'

The City provides services to a large part of the world, and financial services are our biggest sector for employment, taxes and exports. The EU, and Germany and France in particular, envy that position. They would like to divert as much of that activity as they could to Frankfurt and Paris, hence the proposed regulations to move the markets in so-called Over the Counter Products such as foreign exchange, and bonds onto exchanges, like Deutsche Borse and Euronext.

THE EUROZONE LEADERS ALSO FEAR THE MARKETS BECAUSE THEY ARE THE LAST THING WHICH HOLDS THEM TO ACCOUNT.

Because the eurozone countries are running such large budget deficits they are answerable to the bond markets which are now refusing to supply those funds. The attempts by the EU authorities to silence the markets by devices such as bans on short selling are a clear sign of their wish to shoot the messenger, but they are ineffective whilst those market are in and regulated from London.

We are told by critics like Labour's Douglas Alexander that this move has left Britain isolated from Europe. This might be worrying if it were not for the fact so far the Euro has proven to be an unmitigated disaster and there is nothing from this latest in the seemingly endless series of summits to suggest that this will change. We are told that the whole point of the treaty changes was to ensure that there was some central authority which would ensure that, in future, eurozone countries cannot run up the sort of debts which they now have.

DIDN'T WE ALREADY HAVE SUCH RULES IN THE IRONICALLY NAMED GROWTH AND STABILITY PACT ENSHRINED IN THE MAASTRICHT TREATY WHICH WERE DISREGARDED?

"We can't see it's really changed anything," is spokesman Graham Sharpe's verdict on a conflab that produced a more isolationist Britain and a potential two-tier EU - but failed to convince anyone, least of all the markets, that monetary union at last had some durable political oomph behind it.

Simon Smith, chief economist at FxPro, says the fate of the eurozone has now become "binary": "Either one or more of the countries will leave or you'll see an accelerated path to fiscal union. But what has been agreed at this summit doesn't go far enough towards fiscal union. The momentum on that is too slow. I'm less optimistic than I was a couple of months ago."

German chancellor Angela Merkel insisted the agreement was not a "lousy compromise". But, like many economists, Smith suspects it is exactly that. It is built around a toothless-looking "fiscal compact" that is not only reminiscent of the discredited Stability and Growth Pact but does nothing to address what many see as the real eurozone problem - the current account imbalances that are reinforced by, say, Greece's lack of competitiveness compared to Germany's. Instead, Merkel remains focused on deficits.

Indeed, the agreement ducks all of the big fiscal decisions, such as debt pooling or some sort of centralised EU Treasury. Neither is there a banking licence for the so-called "permanent" rescue fund - the European Stability Mechanism (ESM) - that is planned to displace the European Financial Stability Facility (EFSF). The ESM will now be set up by July next year, instead of 2013, with a potential cap of 500 billion euros to appease Merkel. But, as Hardy notes, there's "no word on where those funds would come from".

Richard McGuire, senior fixed income strategist at Rabobank comments: "Crunch time" could be the first half of next year, with Italy having to refinance 36 billion euros of debts in February, 27 billion euros in March and 28 billion euros in April. That is part of a programme that will see almost 400 billion euros of debt issuance by Italy next year - not to mention around 150 billion euros by Spain. Yields on Italian 10-year debt currently stand at 6.8 per cent. On Spain's, the figure is 5.8 per cent. If either stick above the bail-out alert level of 7 per cent, eurozone leaders will have to come up with something better than last week's flim-flam.

That day has not yet arrived, however. As Trevor Greetham, Fidelity's director of asset allocation, says: "There are probably only two stable equilibria, full political union or break-up. With neither imminent, I'd say volatility is here to stay."

It is an irony of history - on this very day 20 years ago, the Maastricht Treaty was signed, bringing the European Union into existence. On December 9 and 10, 1991, the 12 leaders of the European Community agreed to the groundbreaking agreement and a historic project was set on its way.

Two decades on, and with the European debt crisis in full flow, the EU is facing its toughest test so far. Now one person stands out as the most divisive figure: David Cameron. Following marathon talks on Thursday night, the British prime minister vetoed a change in the EU treaties as called for by German Chancellor Angela Merkel and French President Nicolas Sarkozy.

Cameron's use of his veto has provided for much discontent within the European Parliament. "IT WAS A MISTAKE TO ADMIT THE BRITISH INTO THE EUROPEAN UNION," said Alexander Graf Lambsdorff, a prominent German MEP with the business-friendly Free Democrats, and vice chair of ALDE, the liberal block in the European Parliament. The UK must now renegotiate its relationship with the EU, he said. "Either they do it by themselves, OR THE EU WILL BE FOUNDED ANEW - WITHOUT GREAT BRITAIN," Lambsdorff said. "Switzerland is also a possible role model for the British," he added, refering to the fiercely independent stance of the Alpine country, which is not an EU member.

Pentagon and CIA spokesmen would not comment on whether it was the missing US RQ-170 Sentinel unmanned aircraft. A person familiar with the situation confirmed that the drone that crashed was on a surveillance mission over Iran. It is believed to have crashed because of a malfunction and not from being shot down or computer-hacked by the Iranians, a US official said on condition of anonymity. Although there are risks that Iran could attempt to reverse engineer the technology, or sell it to other countries, like China, US officials believe that Iran will not be able to mine the drone's computer systems to learn details of the US surveillance mission.

US surveillance of Iran through various means has been going on for years, US officials and others with direct knowledge of the situation say. A private US defense expert, who spoke on condition of anonymity, said that when he visited the command center at a US military base in the Gulf region in 2008, it was clear that the installation was receiving multiple feeds of electronic surveillance information from inside Iran. Some of the information appeared to be transmitted from high-altitude aircraft and some from electronic sensors which the United States had somehow installed on the ground in Iran, the expert said.

US officials do not appear to be the least bit disturbed about mishaps to Iran's nuclear and missile programs that include the Stuxnet computer virus that attacked centrifuges at the Natanz nuclear site. "Whether it's due to technical difficulties, incompetence, or other reasons, some setbacks to Iran's activities are welcome," a US official said on condition of anonymity.

There was plenty of talk of history in the making in the week before the December 8/9 gathering of European Union leaders - the eighth this year. But it was all about the currency and whether it would survive the strains of a debt crisis that over the past two years has engulfed Greece, spread to Ireland, Portugal, Spain and Italy and now threatens France and even mighty Germany.

As the summit began, there was no hint of the drama that was to come in the early hours of Friday, the moment when Europe split, 26 against one, after about 10 hours of talks. Britain has always had an uneasy relationship with its EU partners, choosing not to join the single currency or sign the open borders Schengen treaty and often kicking against what it sees as Brussels "interference."

But this was a low point. The first time in 39 years that a British prime minister had used a veto to block an EU agreement. David Cameron cast it is a bold and necessary decision to protect British interests. Most of the rest of Europe appeared to regard it as reckless and went a different way. Hours later, when the leaders briefly reconvened to finish their discussions, Cameron cut a lonely figure. French President Nicolas Sarkozy appeared to avoid an extended hand as Cameron walked to his seat.

Another official present at the talks recalled the moment, in the early hours of Friday, when European Union President Herman Van Rompuy, who chaired the meeting, proposed moving forward with an intergovernmental agreement of the 17 euro zone nations, with an open invitation for other countries to join.

"France said yes, immediately followed by Germany and then one by one, in a matter of seconds the member states of the euro zone backed the Franco-German call. Within a few minutes, the non-euro zone member states decided they wanted to be in and left Cameron completely isolated. The swing was very, very quick. Everybody was on board in a matter of minutes. I think it was obvious inside the room that Cameron was shocked by the swiftness with which his allies left him alone."

"Cameron made a serious miscalculation. He genuinely thought he could get something back in return and underestimated the willingness of the euro zone to move on. That's our view. This deal has probably saved the euro, but all this will now have serious repercussions on the relationship between Britain and the EU."

European leaders in Brussels hammered out an agreement that marks the end of unlimited fiscal sovereignty - and that conflicts fundamentally with the British understanding of Europe. The result of Thursday night - the 17 euro-zone countries joined by nine others pending parliamentary approval in three of the non-euro-zone capitals - is a success. A success for the majority of Europeans and for efforts to find a solution to the euro crisis. Any deal with the obstreperous British would have been a weak compromise, and one that would have allowed questionable economic practices to continue.

But from the very beginning, Great Britain's participation in a united Europe was a misunderstanding. When the EU was founded, the British still hadn't finished mourning over their lost empire. Europe seemed far away and Continental efforts at unification were seen by many among the British elite as little more than naive idealism. Despite such doubts, the EU became a reality, and a success - and it was economic realities that ultimately led London to join. Companies in the UK pushed the government toward Brussels because staying away was far too risky economically.

Still, the political classes in Britain never fully shared the Continental conviction that the European Union was an absolute political necessity following two destructive world wars in the 20th century. They never fully believed that Europe had to grow together, despite all the cultural, linguistic and societal differences. In the 1960s, the empire was history, with one colony after the other declaring independence. But instead of turning toward Europe, Britain looked west to the US. And to this day, the UK feels much closer to America than it does to the frogs and the krauts on the other side of the English Channel. One could see the strength of that bond as recently as 2003, when then-Prime Minister Tony Blair joined President George W Bush in his Iraq adventure despite grave misgivings on the Continent.

In Brussels, which has for decades been depicted in the British press as little more than a bureaucratic monster, London has mostly played but a single role from the very beginning: that of a spanner in the works. There has hardly been a decision aimed at greater European integration that Britain hasn't sought to block. And it was a role that even brought financial benefits. Ever since Prime Minister Margaret Thatcher famously demanded "I want my money back," Britain has had to contribute less to the EU than the size of its economy would otherwise require.

To avoid misunderstandings, it is important to note that Britain is a fabulous country, as are its people. Their finely honed humor, tolerance, composure, language, culture and, yes, their worldliness are all to be praised and envied. Germans particularly, with their predisposition to overwrought fear, could learn a lot from the British. But the UK and the EU was a source of frustration for decades. On the long term, a member cannot demand all of the benefits of a community while refusing to shoulder its share of the burdens. One can't constantly seek to thwart all efforts at greater European integration while at the same time demanding a say in all decisions.

The US Geological Service initially estimated the quake at magnitude at 6.8, but downgraded it to 6.7 and then 6.5. A quake of that magnitude is capable of causing severe damage, although the depth of this temblor lessened its impact. The USGS said the quake occurred at a depth of 40.3 miles. It was centered about 26 miles southwest of Iguala in Guerrero and 103 miles south-southwest of Mexico City. Mexico's Interior Department said the quake was felt in parts of nine states.

Humberto Calvo, undersecretary of Guerrero's Civil Protection agency, said three deaths had been reported in the state. He said one man was killed when a house's roof collapsed in Iguala, a second died in the small town of Ixcateopan and the driver of a cargo truck was killed by rocks that fell on the vehicle driving on the toll highway linking Acapulco with Mexico City. Calvo said a secondary highway between the two cities was blocked in two places by rockslides.

High-rises swayed in the center of Mexico City for more than a minute, and shoppers were temporarily herded out of some shopping centers until the danger passed.

Parts of Mexico City rest on the shaky soil of a former lake bed, which tends to magnify the effect of earthquakes. An 8.1-magnitude quake in 1985 killed as many as 10,000 people in the city.

Brave faces were put on, bluffs called, counter-bluffs revealed, vetoes wielded. Histrionics from France: Nicolas Sarkozy, poker-faced calm from Germany, Angela Merkel, David Cameron gambling the UK's place in Europe by opting to battle for Britain rather than helping to save the euro. When the dust settles, Friday 9 December may be seen as a watershed, the beginning of the end for Britain in Europe. But more than that - the emergence for the first time of a cold new Europe in which Germany is the undisputed, pre-eminent power imposing a decade of austerity on the eurozone as the price for its propping up the currency.

The prospect is of a joyless union of penalties, punishments, disciplines and seething resentments, with the centrist elites who run the EU increasingly under siege from anti-EU populists on the right and left everywhere in Europe.

"For the first time in the history of the EU, the Germans are now in charge. But they are also more isolated than before," said Charles Grant, director of the Centre for European Reform thinktank. "The British are certainly more marginal than before. Their influence has never been lower in my lifetime."

Whether or not the summit has saved the euro remains, of course, to be seen. At a single stroke, however, it has transformed Britain's place in Europe. With the fate of the currency at stake in the EU's worst crisis, Cameron opted for a fight and lost, placing the interests of the City of London before the European priority. Battling for Britain and wielding my veto in the Great British national interest, Cameron averred. There are senior UK officials who believe the prime minister betrayed the British national interest by picking the wrong fight at the wrong time, losing, and forfeiting a seat at the table that will determine the future shape of the EU.

"Cameron has miscalculated and performed rather badly. He didn't do well," said a senior EU official. If the main summit narrative was UK v EU, the frictions, anxieties and animosities generated by Germany's new ascendancy, however, extend much more broadly, enveloping France, Spain, Italy, Greece and others. Cameron went to Brussels saddled with backbench taunts of being the new Neville Chamberlain. The nasty references to the 1938 appeasement of Hitler, however, are not only heard on the Tory backbenches and in the Europhobic tabloids in Britain.

Nicolas Sarkozy, too, is contending with attacks from the right and the left that he has capitulated to Berlin and is being compared with the Frenchman who was with Chamberlain in Munich in 1938 - Edouard Daladier. In Greece, Italy and Spain the talkshows and newspapers are bristling with anti-German grudges, regularly bringing up the second world war, the Nazis, the alleged "Fourth Reich".

The refusal by David Cameron, UK prime minister, to agree to a full treaty change for all 27 EU members unless there were safeguards for UK financial services caused a standoff in the early hours of Friday morning with Angela Merkel, German chancellor, and Nicolas Sarkozy, French president. "I really don't believe David Cameron was ever with us at the table," Ms Merkel said. "We're very pleased with the result. Yesterday was no weak compromise for the euro."

"We wish them well," Cameron said. "My judgment was that what was on offer just wasn't good enough for Britain. It's better to allow those countries to do their own thing on their own." Despite the UK's refusal to sign up to the new agreement, Mario Draghi, the European Central Bank president, signalled his approval, a key vote of confidence that could allow the ECB to move more aggressively in eurozone bond markets. "It's going to be the basis for a good fiscal compact and more discipline in economic policy in the euro area members," Mr Draghi said.

Without agreement among all 27 countries, it remained unclear how the new fiscal rules the summit leaders promised to follow would be enforced. EU institutions - most importantly, the European Commission, which oversees and passes judgment on such rules in Brussels - legally cannot have a formal role in any agreement outside the EU treaties.

There were many wranglings and rows with Europe during the Thatcher era and when John Major took the reins of power little changed. The desire for closer links on foreign policy, military and criminal justice became the new battlegrounds but when it came to the crunch even he chose not to veto the Maastricht Treaty that created the EU. Now the area of conflict is financial integration, with Mr Cameron vetoing a plan for closer fiscal union between eurozone nations.

He believes that there would not be sufficient safeguards to ensure that UK interests were protected over the single market financial services. For example, he wants to make sure there is no EU-wide Financial Transaction Tax - known as the Tobin tax - brought in by the EU, which would damage the City of London. Mr Cameron has pledged that there would be a referendum in the UK before any 'significant' transfer of power from London to Brussels. But while the veto is about the single currency, last night's move validates the UK's position on the margins of Europe. The problem now is that world markets were looking for signs of unity and stability in a club floundering over the eurozone crisis.

Mr Cameron's move has sent a completely different message. The treaty that he has refused to support was designed to bring about greater integration of economic and fiscal policies across the EU, including a requirement for member countries to balance their budgets or be in surplus - a requirement that must be enshrined in national law. Other changes to the treaty would see possible sanctions for countries that go into deficit of more than 3 per cent, a requirement that EU states provide 200 billion euros to the IMF within 10 days and the European stability mechanism - its bailout fund - to become active next year.

But before Nicolas Sarkozy makes too much of the PM's desire to put national interest over that of the European bloc he should remember that one of his predecessors, Charles de Gaulle, twice vetoed the UK's proposed entry into the then European Economic Community.

- PM declares: 'I had to pursue Britain's interests... I effectively wielded the veto'

- French President Sarkozy says Cameron's demands were 'unacceptable'

- London Mayor Boris Johnson says PM had 'played a blinder'

- Lib Dem MEP accuses Cameron of 'betraying Britain'

- Only UK and Hungary certain to stay out of new grouping - and Sweden and Czech Republic may join them in two-tier EU

- After 10 hours of talks 17 Eurozone members and six other countries decide to go ahead with a 'fiscal pact'

- City analyst: 'The PM was never going to throw away the advantage the UK holds in financial services, and thank goodness. In the boom times financial services account for one in six pounds collected in tax'

- Rise in Italian and Spanish bond yields this morning

David Cameron was this afternoon returning from Brussels after sparking a furious debate over Britain's future in the European Union by refusing to sign up to a treaty to save the single currency. After 10 hours of talks last night, the Prime Minister risked isolation in Europe by wielding Britain's veto to block a new treaty designed to restore economic stability by imposing tougher fiscal discipline on the 17 euro states.

At least 23 - and possibly all 26 - of the other member states are now going ahead with their own agreement on a new 'fiscal compact'. The Prime Minister entered talks in Brussels promising 'safeguards' to ensure Britain's influence and sovereignty were not diminished by any agreement to save the euro. Key to his demands was that any transfer of power from a national to an EU regulator on financial services could be vetoed by the UK. He wanted to prevent any EU action that would harm Britain's ability to operate its own regime of regulation for financial services.

Mr Cameron's deployment of the veto was hailed by jubilant Tory eurosceptics, some of whom made clear that they regard it as the first step towards a looser relationship with the EU, or even outright withdrawal. One MP hailed him for showing 'bulldog spirit'. Senior Liberal Democrats in the coalition, including Deputy Prime Minister Nick Clegg, insisted they supported Mr Cameron. But there was dismay elsewhere in the party, with MEP Chris Davies accusing the Prime Minister of 'betraying Britain'. Mr Clegg said he 'regretted' the failure to reach agreement overnight, but insisted that the coalition Government was 'united' on Mr Cameron's demands for safeguards to protect British interests.

French president Nicolas Sarkozy said Mr Cameron had made 'unacceptable' demands for exemptions from certain financial regulations in return for joining in the 'fiscal compact' enshrined in the treaty change. 'We were not able to accept because we consider quite the contrary - that a very large and substantial amount of the problems we are facing around the world are a result of lack of regulation of financial services and therefore can't have a waiver for the United Kingdom,' said Mr Sarkozy.

Read more: http://www.dailymail.co.uk/news/article-2071952/Eurozone-crisis-David-Cameron-vetoes-EU-treaty-save-euro.html#ixzz1g3Ixfj29

But not only does Mr Sarkozy refuse to acknowledge the PM, he actually does a swift swerve aside, waving pointedly to someone - anyone - on his right. Mr Cameron, roundly snubbed, uses the rejected hand to give Mr Sarkozy a seemingly affectionate - if awkward - pat on the shoulder, and moves on, head held high, with a pained smile fixed to his face.

Mr Sarkozy's snub came after all-night talks in which the leaders of the 17 countries that use the euro, plus six others, agreed to a new treaty enforcing stricter budget rules seen as crucial to solving Europe's debt crisis. Efforts by Germany and France to persuade all 27 EU countries to agree to treaty changes failed, in large part because of Mr Cameron's refusal to give up some of Britain's powers.

Mr Sarkozy laid the blame for the failure squarely at Mr Cameron's feet. Speaking shortly before dawn, after what he called a 'difficult' night, he said: 'David Cameron made a proposal that seemed to us unacceptable, a protocol to the treaty that would have exonerated the United Kingdom from a great number of financial service regulations.'

Mr Cameron defended his stance. 'What was on offer is not in Britain's interest so I didn't agree to it,' he told reporters in Brussels. 'We're not in the euro and I'm glad we're not in the euro. We're never going to join the euro and we're never going to give up this kind of sovereignty that these countries are having to give up.'

An agreement on fiscal discpline is considered a critical first step before the European Central Bank, the International Monetary Fund and others would commit more financial aid to help countries like Italy and Spain. Even after the long-awaited deal, watched by governments and markets worldwide, the European leaders have huge hurdles still ahead. They are meeting again later today to work out what exactly their new treaty will contain and how violators of its strict budget rules will be policed. They want it written by March.