'Up Eurs" was The Sun's inimitable commentary on Prime Minister David Cameron's decision on Friday to veto the reforms proposed to the 17-member eurozone.

But the reality was rather different: the 26 nations of the EU effectively told Britain where to go in the wee small hours of Friday morning. They were not prepared any longer to accept a country that is not a member of the euro club telling its members what to do.

The 26 will now reconstruct EU budgetary arrangements without Britain having any say. It is delusional to believe, as the Chancellor, George Osborne appears to, that the EU is now the community of one, and that Britain can prevent the 26 from proceeding with fiscal union. Cameron's insistence on Friday that the offices of the EU should not be used to facilitate the new arrangements received a dismissive response from member states. We should not be under any illusion that the tail can continue to wag the dog.

Instead of Cameron having a decisive influence over any reforms to the financial services industry, he will have none at all. The PM refused to countenance the proposed financial transactions tax or further regulation of the banks. Such moves, he said, would damage Britain's economic interests. But since when have the interests of the City of London been identical to the interests of Britain as a whole? The financial transactions tax, sometimes called a "Robin Hood" tax, has supporters ranging from businessmen like Bill Gates and Warren Buffett, to the Archbishop of Canterbury and his Holiness the Pope. The idea should not have been rejected out of hand.

There is also a powerful economic and moral case for greater regulation of financial services to prevent excessive bank lending in future. The City disproportionately shares the blame for the banking crash if only because it is Europe's premier financial hub. The correct response should have been for Britain to agree reforms but use the EU's extensive machinery of conciliation and negotiation to ensure that they did not cause collateral damage to those sections of the financial services industry that were blameless.

The veto may have appealed to eurosceptic Tory backbenchers, but to anyone concerned for Britain's economic future, and for the political stability of Europe, this is a worrying moment. Half of Britain's exports are sold to Europe, and this country has benefited greatly from the single market. The EU has been a major force for peace, uniting the sometimes fractious and defensive nations of Eastern Europe, the Baltics and shortly even the Balkans. The PM would do well to consider how the European and American press have viewed his declaration of independence. Britain is seen to have opted for isolation – a vainglorious nation, with an anachronistic sense of its own importance, acting in pique because it didn't get its way.