President Sarkozy jubilantly hailed a sea-change in “Anglo-Saxon” attitudes to financial regulation yesterday as European Union leaders agreed to set up new watchdogs after the economic crisis. Despite efforts by Britain and Germany to restrain the powers of the new bodies, the French leader forecast that they would grow in strength and bring an end to an era of light-tough regulation that he partly blames for the downturn.

Gordon Brown and Angela Merkel, the German Chancellor, won agreement at a summit of EU leaders in Brussels that the new pan-European bodies would not be able to order governments to bail out struggling banks and other bodies. Three European supervisory authorities will get binding powers to oversee and investigate cross-border banking, insurance and pensions and securities sectors, and to issue binding orders after mediating in disputes between member states.

But while Mr Brown said that the taxpayer would be protected from decisions made at EU level, Mr Sarkozy disagreed, saying that the new bodies marked a decisive break with the past: “We have agreed a European system of supervision with binding powers. My conviction is that its scope will increase,” he said at the end of the summit.

“Mr Brown has assumed his responsibilities. This is a sea-change in Anglo-Saxon strategy.” In response to suggestions that London and Berlin had limited the scope of the European supervisors, he said: “This is a point of departure. In the future there will be an evolution. Institutions end up doing more than foreseen.”

EU commitees of supervisors will be beefed up and turned into bodies called the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority. There will also be a European Systemic Risks Council, which will act as an early warning mechanism for potential bank failure.

“A year ago, if you had asked if it was it possible to go so far as to have the Prime Minister of Britain accepting not only common principles but common systems of auditing and binding decisions at the EU level, no one would have believed it,” an EU official said.

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