Most of Europe's leaders aim to have a common tax and budget agreement in effect by March to fight the eurozone's debt crisis, although the UK will not take part and other countries have said they must put their participation to a referendum.
Most of Europe’s leaders aim to have a common tax and budget agreement in effect by March to fight the eurozone’s debt crisis, although the UK will not take part and other countries have said they must put their participation to a referendum.
The agreement, spearheaded by Germany and France, will not be EU-wide with 27 signatories. Instead, it will be a treaty between consenting governments.
All eurozone governments and up to six outside the eurozone are thought to be ready to sign up. Those outside the eurozone are Bulgaria, Denmark, Latvia, Lithuania, Poland and Romania.
British prime minister David Cameron wished the trading bloc good luck in tackling its problems, but pushed for the UK to be exempted from some of the financial regulations.
He said they would damage the City of London, and by using his veto he effectively stopped the agreement being an EU-wide accord.
Elmar Brok, a German European parliamentarian from Merkel’s CDU party, told the BBC that Britain is now “isolated and marginalised and that’s a pity because all the rules which were set up in the joint treaty would have had no impact on Britain because it’s only for the Eurozone countries. So I do not understand the British position.”
Signatories will adhere to the following measures:
• a 0.5% of GDP limit on signatory countries’ annual structural deficits;
• financial consequences for countries where public deficit exceed 3% of GDP
• stricter rules to be written into the countries’ constitutions
• the European Stability Mechanism, successor of the EFSF rescue fund, will come into force early in July
• assessment whether the €500bn ESM limit is adequate
• Eurozone and other countries will provide up to €200bn to the IMF to help fight debt
• Euro summits will be held at least twice per year.
Speaking after 10 hours of talks last night and further discussions today in Brussels, Germany’s chancellor Angela Merkel (pictured) said: “If we want to have a common currency we must accept European and common institutions have a degree of responsibility. If you do not abide by budgetary levels, you have to take the consequences.
“I believe that after long negotiations this is a very, very important result because we have learned from the past and from mistakes and because in future there will be binding decisions, binding rules, more influence from the commission, more community and with that higher coherence.
“Crisis management and learning lessons need to go hand in hand, and we have done something quite groundbreaking.”
Merkel regretted the UK not agreeing to all the measures planned, in particular financial regulations, but said: “We have achieved what we think is correct and right for the euro.”
Merkel also said the eurozone members had realised that “when the euro was really at a stressed period, we saw that the measures we had taken were not up to it, so we will revisit them. Not everything will be solved with a quick fix solution this has to be redeveloped over years.”
The measures will not include far greater involvement of the European Central Bank in troubled government’s bond markets, as many market participants had wanted. ECB president Mario Draghi had foreshadowed limits to ECB involvement yesterday, and merkel today said the ECB’s independence in this matter must be respected.
Earlier today, Europan Council President Herman Van Rompuy said leaders of 26 countries had expressed willingness to participate in an agreement, depending on speaking also with their parliaments.
IMF chief Christine Lagarde said the deal was “a really good step in the right direction”.
Draghi said it would bring much greater discipline in economic policy, and called it “a very good outcome for the euro area”.
But some leaders said their participation depended on getting further domestic consent, including via referenda.
Denmark’s Prime Minister Helle Thorning-Schmidt said she would have to consult parliament before agreeing.
Ireland’s leaders also suggested they would put their participation to public vote.
Politicians from the Czech Republic have suggested today their participation is not assured unless they agree to the treaty as finally written.