Britain alone as EU agrees fiscal deal
Most leaders agree to tighter budget controls to solve crisis, but UK stays out
European Union leaders, excepting Britain, banded together on Friday to back tighter budget policing after a heated summit considered a last chance to save the debt-struck eurozone.
After two years of foot-dragging on deepening integration, 26 of the 27 EU states signalled their willingness to join a “new fiscal compact” to resolve the two-year crisis threatening to crack apart the monetary union.
But the deal came with a heavy political price when non-euro Britain resisted a Franco-German drive to enshrine new budget rules in a modified EU treaty to carve them into stone.
“The British were already not in the euro and in that respect, we are used to this situation,” German Chancellor Angela Merkel said as talks resumed Friday after a first 10-hour session winding up at 5:00 am.
Merkel said she was “very pleased” most had agreed the “fiscal compact” that plans to impose near automatic sanctions on debt and deficit delinquents.
“We have learned from the mistakes of the past,” she said. The 17 eurozone nations signed up to the pact while nine other EU nations, “indicated the possibility to take part in this process” after consulting their parliaments, EU leaders said in a statement.
Hungary had originally voiced reluctance, while Sweden and the Czech Republic were undecided. The new deal, to be adopted by March, was put to the entire 27-nation bloc in the interests of maintaining unity.
The accord, which is to include automatic sanctions that can only be blocked by a majority of powerful states, aims to end past practices of overspending responsible for the two-year debt crisis ravaging Europe.
Some leaders hope this will spur the European Central Bank to step up its role in the crisis after ECB president Mario Draghi had called for a “new fiscal compact” last week.
Draghi dubbed the summit decisions a “very good outcome” for the eurozone.
But a day earlier he sent markets into a tailspin by saying that the ECB’s purchase of troubled sovereign bonds was limited and temporary. Asian markets dropped as investors nervously awaited the final outcome of the marathon summit.
