Prime Minister David Cameron has rejected proposed changes to the EU's Lisbon Treaty after 10 hours of negotiations, leaving Britain to go it alone in its corner of Europe.
Mr Cameron is risking a separate treaty being drawn up that does not involve Britain, which would leave us isolated on key decisions that affect our economy.
The changes to the Lisbon Treaty would see toughening up of the EU's fiscal rules.
"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," Mr Cameron said at an early morning press conference.
"What is on offer isn't in Britain's interests, so I didn't agree to it."
At the talks, 23 of the 27 EU states have agreed to the treaty changes, with Hungary joining Britain in rejecting it, while the Czech Republic and Sweden plan to consult their parliaments before making a decision.
Following 10 hours of tough negotiations, no deal was made.
"There were strong disagreements but it was good-natured," said Cameron.
"People understood each other. That relationship will be maintained and will work well, but at the end of the day I made my judgment that it was not in Britain's interests."
He insisted that if he were to agree to the treaty, it would have to include a veto on transferring national regulatory powers to the EU, higher capital requirements for banks, a rejection of the European Central Bank's wish that financial transactions in euros could only take place within the euro zone and that the European Banking Authority remains in London.
French president Nicholas Sarkozy, who has been leading the push for the treaty changes, said these conditions would not be possible.