French President Nicolas Sarkozy has declared that there are now “two Europes” following the United Kingdom’s refusal to support a new European Union (EU) treaty that was backed by all other twenty-six members of the economic bloc.

In an interview with the French newspaper Le Monde, Sarkozy also said that he and German Chancellor Angela Merkel did everything in their power to urge Britain to endorse the new treaty, which calls for increased fiscal and economic integration among EU members.

“But unfortunately, [now] there are clearly two Europes,” Sarkozy told the paper.
“One is for greater solidarity and regulation between members while the other is attached to the logic of the single market.”

However, during the interview, Sarkozy maintained that Britain will remain an integral part of the EU

“We need Britain and it would impoverish the EU if they were to leave,” he said.

“With London we share an attachment to nuclear energy and we have strong agreements on defense.”

British Prime Minister David Cameron has defended rejecting the treaty because he felt it would hurt Britain’s financial interests. Reportedly, Cameron sought to exempt UK financial services companies from certain new regulations and taxes that the treaty envisions -- but Sarkozy and Merkel refused to do so.

“The crisis was brought about by a lack of financial regulation, and we could not accept what would be a step backwards. Europe must move towards greater regulation,” Sarkozy told Le Monde.

Cameron explained his decision in a speech before the British Parliament.

We went seeking a deal at 27 [EU members] and I responded to the German and French proposal for treaty change in good faith, genuinely looking to reach an agreement at the level of the whole of the European Union with the necessary safeguards for Britain,” he told MPs.

“Those safeguards on the single market and on financial services were modest, reasonable and relevant.

However, Cameron is now coming under increasing fire for his veto of the treaty.

Olli Rehn, the EU’s Economic Affairs Commissioner, told reporters on Monday: I regret very much that the UK was not willing to join the fiscal compact. I regret it not only for the sake of Europe, as for the sake of British citizens. We want a strong and constructive Britain in Europe and we want Britain to be at the centre of Europe, not on the sidelines.”

Rehn added: If this move was aimed at preventing bankers and financial corporations of the City [of London] from being regulated, that's not going to happen. We must all draw the lessons of the crisis and help to solve it and this goes for the financial sector as well.