French President Nicolas Sarkozy told French newspaper Le Monde on Monday that he and German Chancellor Angela Merkel 'did everything' to convince Britain to join the new EU treaty, adding that 'there are now clearly two Europes'.

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AFP - EU Economic Affairs Commissioner Olli Rehn on Monday expressed regret over Britain's veto of a new EU treaty to boost integration and warned it would not protect the City of London from new financial regulation.

"I regret very much that the UK was not willing to join the fiscal compact," Rehn said. "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 said, three days after British Prime Minister David Cameron refused to sign up to a new treaty to allow the EU to press ahead with greater fiscal and economic integration.

He said he would have preferred to see all 27 EU states agree to the new moves together.

Cameron took his decision after failing to secure agreement from French President Nicolas Sarkozy and German Chancellor Angela Merkel for Britain's huge financial services sector to be exempted from certain EU regulations and a drive to impose new EU taxes.

"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," Rehn stressed.

"We must all draw the lessons of the crisis and help to solve it and this goes for the financial sector as well."

Sarkozy said in an interview with the French daily Le Monde released on Monday that he and Merkel "did everything" to persuade Britain to join in.

"There are now clearly two Europe’s," he added.

Cameron's reluctance to sign up to a deal was due in large part to pressure from both his own lawmakers and the right-wing press in Britain who have been urging him to hold a referendum on any treaty change.

In October, Cameron suffered the largest rebellion of his premiership when 79 Tory lawmakers voted in favour of a referendum on Britain's relationship with Europe.

Cameron also faces pressure from Scotland, where a majority nationalist government in Edinburgh is preparing a referendum on full independence from Britain.

In an angry letter on his return from trade talks in China, Scotland's First Minister Alex Salmond accused Cameron of "blundering" without prior consultation and called for an urgent meeting on what had happened.

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