European Union finance ministers sought to nail down an agreement on new financial oversight agencies but faced resistance from Britain, which is worried these may overrule national regulators.

Swedish Finance Minister Anders Borg, whose country now holds the EU presidency, said the time had come to make a deal.

He told reporters the EU leaders had given their finance ministers until December 31 to approve new EU banking, insurance and financial market regulatory systems as well as a European Systemic Risk Board to watch out for major potential threats to the economy.

“We are getting close to a compromise (but) it will be a very long meeting,” Borg predicted on arrival.

Britain worries EU-wide oversight will erode national regulators’ powers, but Borg said an EU deal was important to show Europe has learned the right lessons from the financial crisis.

Wouter Bos, the Dutch finance minister, said EU nations have not yet resolved whether the new agencies could overrule national regulators when they fail to agree how to tackle problems involving financial companies operating in different countries.

France’s Christine Lagarde said Britain would prefer to limit the powers of the new authorities.

On Tuesday, the 16 nations that use the euro set deadlines for most of them to reduce budget deficits that are well above the EU budget rules that underpin their currency.

It is the first major step most of the eurozone countries are making toward paying off the massive debt built up by spending billions of euros (dollars) rescuing banks and paying welfare to the growing number of the unemployed during the economic downturn.

The move would also come just days after Dubai’s announcement that it is having trouble handling its debt shook financial markets and raised concerns about other heavily indebted economies, such as Greece.

EU officials tried to cool worries over Greece’s ballooning debt and deficit. Luxembourg Prime Minister Jean-Claude Juncker said Greece “is not and will not be in a state of bankruptcy.”

But eurozone nations are clearly worried, telling Greece on Tuesday that it needs to do far more to reduce a deficit that is expected to hit 12.5 percent of gross domestic product this year more than four times the EU maximum of 3 percent.

EU Economy Commissioner Joaquin Almunia said the government needs to spell out new tax reforms, spending cuts and changes to the pension system. He said it was essential to keep up the pressure on Athens “because problems in Greece are problems of the euro area.”

The EU’s executive commission is predicting that the euro economy will start to recover slowly next year, allowing countries to start withdrawing government stimulus programs by 2011.

France will have until 2013 to hit the target and must reduce the deficit by at least 1 percent of GDP a year. Spain must make cuts of 1.5 percent a year to reach its 2013 deadline while Ireland must make steeper 2 percent of GDP yearly cuts to get under 3 percent by 2014.

Germany, the Netherlands, Austria, Portugal, Slovakia and Slovenia also have 2013 deadlines and to make yearly reductions of at least 0.5 percent. Italy and Belgium got tighter deadlines of 2012 and were warned to move more swiftly to tackle huge public debt.

Europe’s growing debt mountains haven’t curbed the strength of the euro currency. Juncker said this doesn’t reflect the reality of feeble economic growth in the region.

He said eurozone economy officials were “not exactly reassured” after weekend talks with China where they asked Beijing to allow the renminbi to appreciate against the “overvalued” euro.

He said eurozone nations “would like to see the gradual and orderly appreciation of the yuan” against the euro to reflect China’s strong economic expansion and the eurozone’s weaker performance. A stronger yuan would allow Chinese people to buy more goods for less, he said.

Two nations outside the euro area, Britain and the Czech Republic, will also be asked to accept deficit reduction deadlines 2014/15 for Britain and 2013 for the Czechs at talks Wednesday between all 27 EU countries.

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