The decisions are part of the EU's efforts to reassure financial markets that fiscal policies in the 27-nation bloc will return to sustainable paths to prevent another debt crisis like the Greek one.
Draft conclusions of the meeting show all countries should adopt laws to enforce the EU's Stability and Growth Pact, which limit budget deficits to 3% of GDP and debt to 60% of GDP.
The Pact also sets a medium-term objective for EU countries, which is a budget close to balance or in surplus.
"As regards the strengthening of budgetary discipline, [the EU summit] agrees on strengthening the preventive arm of the Pact, with possible sanctions or incentives attached to the consolidation path towards the medium-term objective," the draft conclusions read.
Countries sharing the single currency, the euro, are likely to get special attention.
"These will be reviewed so as to have a coherent and progressive system, ensuring a level playing field across member states, while taking into account member states' participation in the euro area," the leaders will say.
The conclusions are the first result of discussions held by a Task Force of EU finance ministers under the chairmanship of EU President Herman Van Rompuy. The Task Force is to toughen EU budget laws in a comprehensive package by October.
EU budget rules now envisage sanctions for eurozone countries that repeatedly break the 3% deficit limit, but there are no penalties for trying to bring the budget into balance or for having high debt.
The leaders will also agree to start paying attention to debt levels and in order to prevent EU countries from embarking on budgetary policies that are against EU budget rules, they should adopt the EU regulations into national rules.
"[The EU summit] agrees on [...] adoption by all member states of national budgetary rules and medium-term budgetary frameworks in line with the Stability and Growth Pact; these should be assessed by the Commission," the draft said.
Budgetary surveillance
Countries will also submit their budget plans for European Commission assessment.
"From 2011 onwards, [governments must present] to the Commission in the spring Stability and Convergence Programmes including budgetary plans for the upcoming years, taking account of national budgetary procedures," the draft conclusions said.
However, there is no consensus around checking and coordinating in detail annual national budget laws, as proposed by the European Commission in May (EurActiv 12/05/10). Instead some are advocating controls on general indicators, which are yet to be defined.
Leaders will also agree to develop a scoreboard to better assess competitiveness developments and imbalances and allow for early detection of unsustainable or dangerous trends in EU countries and especially in the euro zone.
(EurActiv with Reuters.)
