The European Union summit has failed to secure the full backing of the 27 nations for treaty changes to help fight the region’s debt crisis by coordinating fiscal policy, according to reports. Citing unnamed diplomats and senior European officials said that the summit talks would now concentrate on forging an agreement between the 17 euro-zone members and any other countries that wanted to join. No one knows where these agreements will lead. This will leave the markets in turmoil on Friday morning

A complete agreement fell through after the U.K. asked for concessions that France and Germany weren’t willing to give, according to a Reuters report. Does this mean that the UK has withdrawn from the EU?

Ministers and Leaders started what are increasingly being viewed as make-or-break talks for the currency zone at dinner Thursday, and the talks went on into the early hours of Friday morning.

Prior to the summit on Thursday, UK Prime Minister Cameron, President Nicolas Sarkozy and German Chancellor Merkel held 45-minute talks, but sources said there was “no movement” with each side setting out their respective ground. David Cameron has repeatedly warned he will veto anything which harms British interests.

The first draft sets a limit on structural deficits of 0.5% of GDP, compared with the present limit of 3% including debt repayments.

It  includes several way of increasing the reach of the eurozone bailout fund above 500bn euros (£426bn; $670bn) – a measure which Germany has opposed.

These draft conclusions are likely to change significantly before a final agreement is adopted.

The Prime Points:

• the European Commission to have the power to impose penalties for nations that run excessive budget deficits
• all 17 eurozone nations should amend their national legislation to require balanced budgets
• the eurozone countries to have common corporation and financial transaction taxes
• any future bailouts would not require private investors to absorb part of the costs, as happened in the case of Greece

Yesterday, before the EU Summit began, the ECB meetings concluded when ECB President Draghi upset financial markets on by discouraging expectations that the bank would massively step up buying of government bonds if EU leaders agreed on moves towards closer fiscal union.

The ECB President continued to say that the bloc’s existing bailout facility would remain the main tool to fight bond market contagion, despite its clear limits. It was illegal for the ECB or national central banks to lend money to the IMF to buy euro zone bonds, he said, appearing to veto one firefighting option under consideration. Draghi also said that it was against the treaty for the ECB to loan directly to nations or to bailout nations. They could only provide liquidity to banks.

With the failure of the EU Summit to obtain the support of the 27 nations, it is unclear, what effect this will have on the role of the IMF and the ECB. Will they strike out alone with their own plans to help save the European nations?

Will the EU break up or will nations withdraw from the treaty. It is unclear. What is clear that the markets will remain volatile, volatility is a friend to the forex trader, with huge market swings, there is a lot of profit to be made, but also high risk, as the markets can easily jump past stop losses? A good trader, knows that to swim in this pool, takes an expert, someone with his eyes and ears around the globe, someone with instant information and who can react within seconds.

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