European Union leaders agreed a new "fiscal compact" on tighter budget and debt rules for the eurozone in summit talks that lasted until around 5 am Brussels time.
An agreement to tighten fiscal discipline in the wider EU-27 proved impossible after UK Prime Minister David Cameron made "unacceptable demands" to exempt the City of London from financial market regulations, according to French President Nicolas Sarkozy.
"David Cameron refuses to continue the discussion, but is still in the room," a diplomat told EurActiv just before negotiations were interrupted.
"Cameron is in the corner," he said.
'17+6', more to join
EU leaders have therefore resorted to the less enviable option of a treaty among the 17 eurozone countries, open to others. At least six additional countries have agreed to sign up – Bulgaria, Denmark, Latvia, Lithuania, Poland and Romania.
"Having seen it was not possible to get unanimity, it was the proper decision to go ahead at least with those ready to commit immediately," Sarkozy said at an early-morning news briefing.
"That includes all 17 in the eurozone, plus some who are not in the euro area but want to take part in this fiscal compact," Sarkozy said in reference to Poland and possibly others.
Given the reticence of some leaders, an intergovernmental agreement outside the EU legal framework was the only solution, Sarkozy explained.
"But that does not mean that the EU institutions are not going to have a role," Sarkozy added.
Britain isolated, Hungary undecided
Further talks on the legal details of the new treaty will now resume in the weeks to come, with all the "17+6" signatory countries at the table, EurActiv was told.
The new treaty will be on the table of the next regular EU summit in March 2012 and then open to ratification.
The Czech Republic and Sweden first need to consult their national Parliaments before they can join in, said European Council President Herman Van Rompuy. He confirmed that Latvia, Lithuania, Romania and Bulgaria are all in.
But the UK will definitely not be there and Hungary was expected to be absent as well, sources said, although Budapest might reconsider its stance in order not to be isolated, EurActiv understands.
This would leave Britain as the sole EU member state clearly outside of the agreement, with its future as part of the EU now put in question.
'Fiscal compact'
Along the lines of a new "fiscal compact", sanctions on budget rule-breakers would apply automatically unless blocked by a qualified majority – or three-quarters of eurozone member states. This will be done via an amendment to Article 126 of the EU treaty.
Countries will commit to enshrine a "golden rule" to run budgets which are balanced or in surplus into their national constitutions "or equivalent level". The signatories recognise the European Court of Justice "to verify the transposition of this rule at national level," the text reads.
The new procedure will also oblige euro area countries to submit their draft budgetary plans to the European Commission before they are adopted by their national parliaments, although the Commission will not have the power to annul them.
Financial backstop
Further talks will also address new financial backstops to protect eurozone countries against speculative attacks on the sovereign bond market.
Christine Lagarde, the International Monetary Fund's managing director, confirmed that a commitment to boost the IMF by €200 billion had been struck, via bilateral loans. However, the details still need to be confirmed by the EU and the IMF "within ten days".
Meanwhile, the entry into force of the eurozone's permanent bailout fund – the European Stability Mechanism – will be pushed earlier, in July 2012, instead of 2013.
But only small progress was made on ways boost the firepower of the EU's current bailout fund, the European Financial Stability Facility (EFSF). The fund's ceiling is fixed at €500 billion as of March 2012, the statement said.
COMMENTS
I am certain the Sarky was sniggering fit to bust. Cam-moron (rarely more deserving of this moniker) will now see the (sh)city of London eviscerated with respect to the trading in Eurobonds (it currently does around 50%) as legislation will drive it into the Euro zone. There will be some that will whine about reduced liquidity (code for the ease with which one can buy and sell). However, this is likely to be a good thing, slowing the market down so that it does not react to every utterance from solid gold doorknobs like Standard & Poor and the other cretins in the “let’s play credit ratings today children” nursery. Here’s a hint to the Euro zone countries – if you want a credit rating – walk out into the street and pick somebody – anybody – Christ pick a bloody tramp – even they could do a better job than the over paid, over here (they are all American) CRAs.
Moving back to Tory-scum land and the soon to be dis-united kingdom, the Scots will see this as a chance to pull further away from Tory-scum dominated England – the referendum in 2015 will lead to fiscal independence & what better way to assert it than joining the Euro zone. Still, one cannot expect anything else from a guy educated at eaton & who spent his university days wrecking restaurants – as others have noted, Cam-moron lacks the intellectual capacity for this kind of thing – and it showed last night. As they say, you get what you vote for, in this case a Cam-moron.
A quite misleading title. Since when an intergovernment agreement is called a Euro Treaty. And who's in the corner? I doubt it's Cameron. I call such articles propaganda.
The Euro accord is an important step forward. However, the inability to deliver a treaty change opens up the following questions:
1. When will new institutions be established to monitor and implement the accord? Allowing Member States to implement this themselves is the problem and this has not be removed. If EU institutions cannot fulfill this role then there is no other route but new institutions.
2. What prevents the Euro accord from agreeing legislative measures such as a financial services tax or border protection to preserve the functioning of the Eurozone and its economies, for example? In light of this, why would a country other than the UK wish to remain outside this accord?
3. If it proves to be effective or more effective than the EU institutions, will the accord expand its remit into other issues alongside or outside the issue of fiscal governance?
Mike Parr would evidently like any outcome as long as he can slag off Cameron.
The fact is that the end game for a successful Euro is a federal Europe and any price is better than that. Mike can always relocate if he feels that strongly about it
Luckily the UK has just stepped off the Titanic just before it sets sail!
@Charles and Mike. Both seem very extreme views though Mike was far more aggressive. I think Cameron has done very poorly for what its worth, and I think its not a lack of capacity but inward thinking. The same thinking that has caused this crisis and allowed it to continue. We all know what needs to be done and now Cameron has locked himself out of all future negotiations.
Short-Term
-ECB needs to become a real Central Bank akin to the Bank of England or US Federal Reserve to become a back-stop in some way or fashion. This could be done by stabalising debt at 6.5% of these profiligate countries to keep it stable yet high. The interest then can be poured back into the markets by investment therefore having the ECB and EIB working together or maybe the Commission itself.
Medimum Term:
The ECB should relegate back to its normal functions as bond markets stabilise. During which, fiscal policy should look to not just austerity but enter growth though these measures should be taken in line with enhancements to democratic control of the EU in the long term.
Long Term:
Debt mutualisation needs to occur at some point and will bring fiscal union to life. In order for this to be carried out properly, the European Commission President and President of the Council should be combined and popularly elected. This will help mitigate all democratic legitamacy issue along with an empowerment of the Parliament which should be adjoined with the European Council in a bicameral system. I think the only adjustment to the Council would be a need to have permenant representatives sent by the member-states to act on their behalf or, more radically, directly elected senators. In general, this is pushing towards federalism but I rather be a bloc of Europeans than weather globalisation as a single medium power that is ever dwindling.
In reply to Charles - I have lived outside the Uk for more that 27 years - I like places not run by Tory-scum and where the local don't feel the need to tear cities apart.
Slagging off cam-moron? one hardly needs even to try - watch as euro-bond business evaporates from the (sh)city of London.
What I would like to see is a UK that provides well paid jibs for most of the population - successive tory-scum goverments have made sure that economic development in the Uk is focused in the south east (with crumbs to the rest) - where most tory-scum supporters reside - logical but that then makes the tory-scum party regional - not national.
Finally, it will be interesting to see which is the Titanic - the UK (US poodle) or the Euro zone.
In response to Alex Locke - I despise Cam-moron & the tory-scum party - I do not think this is an extreme view with respect to a party that eviscerated the Uk economicaly and unbalanced the economy - such that it isn't (and economy)
In the case of the CRAs, this rabble provided AAA ratings to 90% of the CDOs issued covering US mortgages - and thus caused the 2007/2008 global financial disaster. In a normal society the people that did this would be serving life sentences - instead nothing happen - & there is no indication they have changed their ways - & you sir have the temerity to accuse me of being aggresive??? I'm laughing even as I write this at your brass-necked impudence.
Otherwise - Mr Lock I thought that your financial poitns were fair.
Mike, just stay there for another 27 years please.
ps your not the only one who has lived overseas - I'm half Belgian myself but have no desire to live there. You seem to have a rabid obsession that anything British must be worse than it is elsewhere, well too bad I say.
When I Visited London 10 years ago after staying with Friends in Germany the Cost of Living in the UK was 3 Times higher then the German Cost of Living. In all Honestly this equates to a much weaker Economy in the UK Versus Germany and even before the Euro was introduced which profited Germany very nicely and forged an even more powerful German Country. Presently let's Compare Real estate Prices in Berlin and London...Berlin Real Estate Prices are about 10 Times less then London Prices, also Food Costs, Electricity,Clothing,Medical/Dental Costs,Plane Tickets, etc..are much Cheaper in Berlin Versus London and the Kicker? The Median hourly Wage in Berlin is about the Same as London. By The Way Berlin is still about 20% below Western Germany Standards of living!!When the Euro was First introduced Prices increased in Germany but within 1-2 years prices fell again and then became stable. The Strong Parts of Europe Economically are: Germany, Northern Italy, Northern Spain, Eastern and Southern France,Belgium, Netherlands, Finland, Norway,Sweden, Switzerland, Austria and Scotland(Oil)while up and Coming areas are the Czech Republic,Hungary, Slovakia and Poland. Weaker Economies/Societies are Britain, Southern Italy, Greece, Bulgaria, Romania,Parts of France, Southern Spain and Outside of Lisbon in Portugal.Ireland has a Strong Export Economy but High Debt levels because of the Banksters.
CMR: "Luckily the UK has just stepped off the Titanic just before it sets sail!"
@CMR. This Titanic was a British ship..
Thomas
You should check Eurostat data which I do weekly if not more, to see that many of your assertions are somewhat off mark. Take energy costs for example, UK costs are at the lower end of the EU. You mention "Strong Parts of Europe", but with respect to GDP the UK is still at the upper end, with some UK regions at or near the top. I think your experience of 10 years ago was wrong then, even more so now.
In response to Charles, I have Deutsche Bank data showing house price increases across several countries. UK, Spain, Ireland, Germany, France. The first three saw very large (inflationary) rises in house prices - these fuelled a consumer boom. Germany over 10 years saw almost no increase - prosperity in Germany does not depend on house price inflation. I could make the same comments regarding Belgium. Naturally, there are some variations (Paris) although these tend not to reflect overall national trends.
You are correct on energy prices (15 euro cents/kwhr UK vs 26 in Germany). However, prices for gas are much closer (4.5 vs 6 euro cents/kwhr) with gas accounting for much more than electricity in a given bill. Furthermore, higher prices incentivise energy efficiency (you are in favour of that? or do you prefer waste?)and a move to energy independence - which means less money to either the Russian mafia or nutty middle east despots (or do you prefer to keep either or both in business?).
You need to get out more Charles - off that little island - see the world etc. This is all off-topic. The (dis)UK is stuffed - by 2020 we will see "ingerland" on its own probably begging to join the Euro (snigger).
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