LONDON (MarketWatch) — Euro-zone leaders said on Friday they will forge closer fiscal ties via an inter-governmental accord that will likely be adopted by 26 European Union nations, leaving Britain isolated as the only member to definitively refuse to participate.

After Prime Minister David Cameron failed to secure the concessions he wanted, Britain refused to back proposals to amend the EU treaty.

As a result, the 17 euro-zone nations committed to an inter-governmental treaty that will make tougher fiscal rules binding. This accord will be open to non euro-zone nations and all except one are considering participation, said European Council President Herman Van Rompuy.

Effort to forge EU treaty is tense

“Rather rapidly, following consultations with national parliaments, we should know the number of participating states,” he said at a press conference. “I am optimistic because I know that it is going to be very close to 27. In fact, 26 leaders are in favor of joining this effort.”

German Chancellor Angela Merkel praised the agreement, saying that a breakthrough to a stability union has been achieved.

Britain rejects deal

The United Kingdom, which doesn’t use the euro and has no plans to join the euro zone, decided to opt out of the proposed deal. It was not the first time the U.K. has refused to go along with moves aimed at tightening links between EU states. Britain famously refused to sign the Maastricht treaty, which paved the way to the creation of the euro until it had negotiated an opt-out clause. It also refused to sign up to the Schengen accord guaranteeing passport-free movement within the EU.

“What is on offer isn’t in Britain’s interests, so I didn’t agree to it,” British Prime Minister David Cameron said at a briefing.

“We want the euro-zone countries to come together and solve their problems, but we should only allow that to happen inside the European Union treaties if there are proper protections for the single market and for other key British interests,” Cameron said. Among Britain’s main interests is the financial-services sector which dominates London’s economy.

Germany and France proposed the fiscal pact earlier this week as part of a plan to shore up confidence in the euro and address the debt crisis.

“We would have preferred a unanimous agreement. This was not possible,” European Commission President Jose Manuel Barroso said.

“The only alternative was to do it via an inter-governmental treaty, but that doesn’t mean that EU institutions won’t have a role,” he said.

A fiscal compact

The so-called fiscal compact agreed Friday includes a rule that annual structural deficits should not exceed 0.5% of nominal gross domestic product. This rule will be introduced in nations’ constitutions and the European Court of Justice will verify compliance.

There will also be automatic sanctions for countries whose deficit exceeds 3% of GDP unless a qualified majority of euro-area members is opposed.

Euro-zone leaders also said they intend to deploy rapidly the leveraged European Financial Stability Facility, the euro zone’s bailout fund. And the European Stability Mechanism, the new bailout fund meant to replace the EFSF, will enter into force earlier than planned in July 2012.

Also, euro-zone and other EU members will aim to make an extra 200 billion euros (around $268 billion) available to the International Monetary Fund in bilateral loans to ensure that the IMF has adequate resources to deal with the crisis.

Christine Lagarde, the IMF’s managing director, said Friday’s decisions “are an important contribution to helping address the crisis facing the euro zone and strengthening the global economic recovery.”