By Simon Miller
Doubts are rising over the possibility of a quick deal for the eurozone on Friday as UK Prime Minister David Cameron threatens a veto.
Writing in the Times, Cameron warned he would scupper plans for greater eurozone intergration if the single market and the UK's financial services were not protected.
He wrote: "If we are changing the treaty that applies to all EU countries and allowing the eurozone countries to have new rules, it is also important that there are rules to keep the single market fair and open for key industries for Britain, including financial services.
"Clearly, we will need to look at the right safeguards for Britain in the light of what is proposed. Our colleagues in the EU need to know that we will not agree to a treaty change that fails to protect our interests."
Meanwhile, Berlin is reported to be increasingly pessimistic over a deal at Friday's EU summit.
Speaking to Reuters on condition of anonymity, a German official commented: "We get the impression from many conversations in recent days that a lot of the protagonists still have not understood how serious the situation is."
French President Nicolas Sarkozy and German Chancellor Angela Merkel will lay out their plan to impose mandatory penalties on euro states that exceed deficit targets, with the aim of restoring market trust and preventing the region's debt crisis spiraling out of control.
Following his meeting with French finance minister Francois Baroin, the US Treasury secretary Timothy Geithner - currently carrying out some shuttle-diplomacy in the eurozone - told reporters: "I have a lot of confidence in what the president of France and the minister are doing, working with Germany to build a stronger Europe."
"Neither Nicolas Sarkozy nor Angela Merkel will leave the negotiating table of this summit until there is a powerful deal. A lot depends on what happens Friday, ... on how the response given by the heads of states is received," Baroin told French station Canal+ television this morning.