Merkel 'pleased' to have achieved 26-state agreement [VIDEO]

European Council president Herman van Rompuy has announced that as many as 26 EU member states will be moving forward on an intergovernmental treaty calling for stricter governance of the eurozone.

The agreement leaves the UK out of the proposed talks, which are expected to take place within a reduced time-frame, unlike a previous proposal to change any EU Treaty where discussions would have taken longer.

German Chanceller Angela Merkel said she was pleased to have "achieved what I wanted to" and that she regretted that the UK could not follow in the same path.

"Our preference is to have 27 member states changing the Treaty, but without a unanimous decision, we have to take another decision," Van Rompuy said in a press conference. "It is possible to have an intergovernmental treaty with 26 member states."

Van Rompuy said Britain's decision to withdraw from the talks was "unfortunate".

European Commission president Jose Manuel Barroso said the agreement on the treaty sent a clear political message that EU member states were still choosing a legal instrument that will be as binding as possible.

"At least 23 member states will be part of that agreement, and three more want to consult their national parliaments. The aim is to enforce governance of the euro area alone... member states are ready to accept the intrusiveness of the EU for a disciplined effort towards greater convergence.

"As we said before the summit, the most important question was whether eurozone members of the euro area were ready to confirm their lasting commitment to the euro area," Barroso said.

Prior to the working dinner in Brussels yesterday evening, Prime Minister Lawrence Gonzi said that changes to the Treaty regulating the eurozone should only be considered as a last resort.

However, Gonzi did not exclude the possibility of agreeing to a new treaty.  "Any changes to the EU Treaty to solve the eurozone crisis should only be considered if no other solution is found," Gonzi said.

Gonzi added that the process to change the treaty is a complicated one and requires the consensus of all member countries, possibly through a referendum in some countries.  "Possibly, measures should be introduced without drastically changing the treaty."

"This is a critical and unprecedented moment for the EU. Member countries should be determined to find a solution".

Gonzi said he agrees with all measures which could resolve the eurozone crisis.

17 eurozone member states and six others will be signing a separate eurozone pact for new rules to be enshrined in their national laws, but also hand over more control to Brussels over their national budgets. It will be an inter-governmental agreement, not a treaty.

The background to this stricter application of eurozone rules is the fact that countries like Greece, Ireland and Portugal could no longer afford the interest rates charged by lenders and had to be eventually bailed out by the EU and International Monetary Fund, to prevent default. The same goes for Span and Italy.

Germany's Chancellor Angela Merkel and French president Nicolas Sarkozy see the enshrinement of budget rules in EU treaties, and the imposition of penalties on countries that go above the agreed deficit limits as the only way to ensure more discipline.

Herman van Rompuy, the president of the European Council, has also proposed a measure for the European Commission to monitor draft national budgets before they are presented to parliaments.