Just when we thought European leaders had exhausted their means of disappointing us, that we could rely on them to let us down in the same way they’ve been doing for 18 months, they produce something special like Friday’s Brussels all-nighter.

That any sort of resolution of the immediate crisis wasn’t reached wasn’t surprising. The €200 billion to be provided to the IMF (€50 billion of which will come from EU countries outside the eurozone, like the Brits) is clearly an insufficient addition to the €500 billion European Financial Stability Facility and European Stability Mechanism funds ceiling. “We are looking forward to parallel contributions from the international community,” the leaders’ statement said, demurely, without acknowledging that they’d already gone with begging bowls to the Chinese once and come away empty handed.

As anticipated, the ESM will also be accelerated, with a hopeful start date of March 2012, with the EFSF kicking on until 2013. Still not enough. And we already know that the ECB is continuing to insist that it won’t take action beyond its current program of easing liquidity and buying the bonds of Italy and Spain. In terms of dealing with the current crisis, it’s not so much a question of the size of Europe’s bazooka as their insistence on continuing to bring a knife to a gunfight. Italy has to refinance around €90 billion in the next five months alone, while the Spaniards will be looking for about €150 billion in total next year.

But we already knew that. Where the summit surprised was in the ready adoption by the entire eurozone and, it seems, all of the remaining EU members except the British, of a new fiscal compact to impose fiscal discipline on all states.

This has been interpreted as Germany successfully imposing its fiscal rigour on the rest of Europe, giving the lazy southern economies a dose of fiscal puritanism A quick glance at the relevant stats suggests how revisionist that interpretation is: while the profligacy of Italy and Greece are notorious, consider the relative performance of Spain and Ireland compared to Germany itself — albeit bolstered by structural adjustment payments from the EU:

The problem is, as a long-term goal the fiscal compact is fine. As a short-term measure, it eliminates the possibility of any end to the fiscal austerity that will keep European economies mired in recession for, most likely, years to come. Europe, including the UK, currently needs stimulus. Instead, governments are actually cutting spending. The net result is that European leaders have locked in an economic contraction that will go long enough to truly merit the tag “depression”, placing further pressure on states with heavy debt loads. The traditional criticism is of generals fighting the previous war. European leaders have performed the neat trick of fighting the next war, while the current war rages out of control.

For the British, it gets even better. David Cameron may be enjoying congratulations of his peers on showing those Germans and French that the United Kingdom can stand alone and appeasing Tory euro sceptics who recently attempted to initiate a referendum on UK membership of the EU.

But the reality is, the UK’s veto early Friday morning was significant for all the wrong reasons. Cameron’s attempt to play hard ball over financial regulation has now left the UK with very little influence at the negotiation table and a bleak future in relations with the Germans and French.

Quite what Cameron gains in terms of protection of the City and the UK’s financial sector isn’t clear. The coalition government is moving to impose further regulation on British banks, going as far or further on some issues as the Europeans. The likely result is a divergence of financial regulation between the continent and the UK, reducing the City’s capacity to function as a financial gateway to Europe and, inevitably, boosting its rival Frankfurt.

While Cameron has been quick to claim that it was a coalition decision, Deputy Prime Minister Nick Clegg is the leader of one of the most pro-European parties in the British political system. Clegg’s mentor, former Liberal Democrats leader Paddy Ashdown, came out to declare that 38 years of foreign policy of policy had been tipped down the drain with Cameron’s veto. Opposition Leader Ed Miliband stated that Cameron’s actions were not a veto but rather failed to protect British interests by further isolating Britain within the EU.

It is now clear Cameron will face a divided House of Commons tonight our time to explain and defend his actions. It is likely that Cameron will be reminded of the fact that 40% of British exports are sent to the EU and the economic disaster that will befall Britain if the current treaty does not rescue the eurozone.

And how does this affect the special relationship? Not long ago, Tony Blair famously declared that the UK should act as a trans-Atlantic bridge between the US and Europe and it appeared more recently that Europe was high on Barack Obama’s agenda during his visit to the UK. Now, Cameron may find himself left in the cold while the US turns directly to France and Germany.

There’s some historical context to that. In the late fifties, Charles De Gaulle worked hard to convince West Germany’s Konrad Adenauer that Europe’s future lay in a French-German axis, with the British and the Americans excluded. De Gaulle never really understood that the Germans would never turn their backs on the US alliance. But he was successful in keeping the British out of Europe until well after he had left the political stage. Nicolas Sarkozy, finally displaying some of the cunning that the best of his predecessors have always possessed, is now well on the way to driving the British back out.

The European debt crisis exposed two uncomfortable truths about the EU; one was that a single currency with a loose structure of regulation and governance was destined for crisis. The second was that EU elites could no longer labour under the misguided belief that all economies were equal. And now with Britain out of the picture, it is clear that this is a very Franco-German plan that will elevate Germany to become Europe’s greatest power.

This could very well be the fruition of Sarkozy’s two-speed eurozone plan. What a difference a half-century makes.