Majority support for new EU fiscal accord

Irish Sun Tuesday 31st January, 2012

NEW YORK - European Union leaders, grappling with a debt crisis, reaffirmed their commitment Monday to strengthen a financial firewall and 25 of the 27-nation bloc agreed to sign a new fiscal pact limiting public spending.

The members also pledged to spur growth and create jobs in an acknowledgement that mere austerity cuts will not pull the continent out of its economic morass.

Of the EU's 27 member states, 25 agreed to sign an accord to prevent reckless government spending. The treaty will empower the European Court of Justice to monitor compliance and impose fines on rule-breakers.

The treaty also gives an enhanced role to the European Commission in scrutinising national budgets.

The new treaty is to be ready by March.

Britain opted out of signing the accord. It had rejected the proposal when it was first put forward last month. The Czech Republic also did not sign citing constitutional objections. Neither country is among the 17 that use the euro currency.

British Prime Minister David Cameron said: "We will not be ratifying this treaty and it places no obligation on the UK."

Cameron said further reforms were still needed by eurozone states to end the debt crisis in the region.

"I don't think this treaty on its own will sort the eurozone's problems," he said after the leaders' meeting in Brussels.

The EU leaders also agreed to implement the European Stability Mechanism, a permanent rescue fund, in July. The euros 500 billion ESM was originally to enter into force next year, when a temporary bailout fund expires.

"The early entry into force of this permanent firewall will prevent contagion in the euro area and further restore confidence," European Council president Herman Van Rompuy said.

But the leaders did not propose any new measures aimed at resolving the situation in Greece, the nation at the center of the debt crisis in Europe.

French President Nicolas Sarkozy told a news conference he expected a final agreement on reducing Greece's debt to private bondholders "in the next few days" and believed that European institutions - a clear reference to the European Central Bank - would decide independently to help meet a funding gap.

The European Union said they would make special efforts to tackle youth unemployment, which has swelled to alarming levels in countries such as Spain.

They promised to increase apprenticeships, remove impediments to further liberalize trade within the EU and dip into an untapped pot of more than $100 billion in development funds to launch new projects.