French President Nicolas Sarkozy has labelled “unacceptable” a set of conditions imposed by British Prime Minister David Cameron for the latter to back full EU treaty change.

“We would have preferred a deal at the level of the 27,” Sarkozy said after late-running talks at a crunch summit ended at around 5am local time (1500 AEDT).

“That wasn’t possible taking into account the position of our British friends,” he added.

“In order to accept treaty revision among the 27 EU states, David Cameron asked us – something we all judged unacceptable – for a protocol to be inserted into the treaty granting the United Kingdom a certain number of exonerations on financial services regulations.

“We could not accept this, since we consider, quite on the contrary, that a part of the world’s woes stem from the deregulation of the financial sector.

“If we had accepted a derogation for the United Kingdom, that would mean to throw into question a large part of the very necessary work done to regulate financial services.

“I’m not saying that is Mr Cameron’s position.”