In Brussels
German and French leaders were defiant. Nicolas Sarkozy said that they were not about to see the euro “drown”. David Cameron’s request for the UK to be exempt from certain financial regulations was unacceptable. “”We consider on the contrary that a good part of the worries of the world come from the deregulation of financial services.”
Mario Monti, the new Italian prime minister, also described the prime minister's request for Britain to opt out of financial regulations as "something which we all considered was unacceptable". He suggested that in future the UK would experience a "certain isolation" from decision making.
Angela Merkel said: “We had to avoid a lousy compromise for the euro, and we have succeeded.”
She later expanded: "We're gaining credibility step by step.
When I say we, I'm talking about the 17 countries that are part of the eurozone. Some countries will consult their national parliaments and they will support us with a positive spirit. There's only one country that has indicated its reservedness and that is Great Britain."
In private, some were less polite. According to Benedict Brogan of the Daily Telegraph, a French official said that that Cameron was “like a man who goes to wife-swapping party without his wife'”.
The Swedish prime minister, Fredrik Reinfeldt, supported the UK's right to stay out, commenting: "The whole text is written to make eurozone members submit to certain restrictions and do certain things.A non-eurozone country can't reasonably sign up to that.”
European financial executives emphasised the positive outcomes. ECB President Mario Draghi described the treaty as a good outcome. “It’s going to be the basis for a good fiscal compact and more disciplined economic policy in euro area countries.”
Christine Lagarde spelt out the results:"The members who will be part of the treaty have decided upon three key components: fiscal union, to accelerate the implementation of the European Stability Mechanism, and to add to the reserves of the IMF by 270 billion dollars to be confirmed within 10 days."
However, the President of the European Commission, Jose Manuel Barroso, felt the need to qualify his approval:
“I have to be very open and honest with you as always, we would have preferred of course a unanimous agreement”
At home
David Cameron defended his deployment of Britain's veto: "I said before I came to Brussels that if I couldn't get adequate safeguards for Britain in a new European treaty then I wouldn't agree to it. What is on offer isn't in Britain's interests so I didn't agree to it.
"While there were always dangers of agreeing a treaty within a treaty, there are also risks with others going off and forming a separate treaty. So we will insist that the EU institutions – the court, the commission – that they work for all 27 nations of the EU. Indeed those institutions are established by the treaty and that treaty is still protected."
He later justified his decision saying: "We have the right deal for Britain in Europe and we're going to make the most of it."
The Liberal Democrat response was more muted. Nick Clegg said: "I regret that last night it proved to be impossible to find a way forward as a group of 27 on European treaty change.”
And Vince Cable depicted the decision as a pro-European one. "We have critical interest in keeping the single market, keeping it open, enlarging it. That's what's the argument is about.”
Later, former party leader Sir Menzies Campbell emerged to dismiss claims that the UK would be isolated. He said that "quite a lot of constitutional water" would have to flow under the bridge before it could be claimed that Britain was out of Europe.
Labour leaders have criticised the decision. Ed Miliband asked: “Have we now got the two speed Europe Britain has always opposed, but without any of the safeguards the prime minister promised to deliver?” He accused Cameron of dealing with splits in his party rather than the national interest.
And shadow business secretary Chuka Umunna attacked Cameron on Twitter this morning: "After all the big talk exactly what powers has the Prime Minister got repatriated to the UK? Are we now stronger or weaker on the international stage?"
Terry Smith of interdealer broker Tullett Prebon had a different take. He told BBC Radio 4: "[The UK is] as isolated as somebody who refused to join the Titanic just before it sailed."
Unsurprisingly, UKIP leader Nigel Farage had much to say. "Every time the euro totters the City of London will now be blamed. But it's the beginning of the end for Britain in Europe." In what might be seen as a compliment for the prime minister, he added: "Cameron's less popular than me."
Eurosceptic Tory backbencher Mark Reckless also voiced his approval. "The Prime Minister has been as good as his word." His colleague Bernard Jenkin said that David Cameron had no option but to veto the treaty. "We cannot allow the European Union to regulate the City out of existence"
Boris Johnson, who called for a veto yesterday, said: "David Cameron has played a blinder and he has done the only thing that it was really open to him to do.”
The eurosceptic Labour MP Denis McShane commented: "It is an historic turning point and Britain might as well get out now, as Europe's future will be settled without us."
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