EU summit: UK and Czechs refuse to join fiscal compact


Germany's Chancellor Angela Merkel says EU leaders have taken an "important step forward"

Twenty-five of the EU's 27 member states have agreed to join a fiscal treaty to enforce budget discipline.

The Czech Republic and the UK refused to sign up. UK Prime Minister David Cameron said his government would act if the treaty threatened UK interests.

He still has "legal concerns" about the use of EU institutions in enforcing the fiscal treaty, he said.

The Czechs cited "constitutional reasons" for their refusal, France's President Nicolas Sarkozy said.

Czech President Vaclav Klaus, a Eurosceptic, may be reluctant to sign the treaty, analysts say.

The goal is much closer co-ordination of budget policy across the EU to prevent excessive debts accumulating.

Germany - the eurozone's biggest lender and most powerful economy - was particularly keen to get a binding treaty adopted to enforce budget rules.

The treaty will empower the European Court of Justice to monitor compliance and impose fines on rule-breakers.

The treaty also spells out the enhanced role of the European Commission in scrutinising national budgets.

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

The Czech Republic is not yet in the euro, but like the other new EU member states it is committed to joining.

European Union leaders also discussed ways to stimulate economic growth despite the stringent austerity budgets in many countries - and focused on how to reduce unemployment across the eurozone.

UK concerns

The UK and Denmark are the only states with explicit opt-outs from the euro.

Mr Cameron said "it's good that the new treaty is absolutely explicit and clear that it cannot encroach on the competences of the EU".


No-one believes that this treaty on its own will solve anything, and it could face an uncertain future. The Socialist candidate in the French presidential election Francois Hollande has promised to renegotiate it if he wins, and President Nicolas Sarkozy has now confirmed that the treaty will not be ratified in France before the election takes place.

In fact given general agreement on the need for measures to promote growth, some critics have described the fiscal treaty as little more than a distraction. But Germany has pushed hard for its implementation - partly to persuade political opinion in Berlin that there really will be strict rules in place to ensure that another debt crisis can't happen in the future. Only then will Germany consider spending more money to help other countries which are struggling with their debts now. The fear is that if Germany doesn't act, the current crisis will only get worse.

"They must not take measures that in any way undermine the EU single market," he said, adding: "we'll be watching like a hawk".

He insisted that the treaty would impose "no obligations on the UK".

Mr Cameron used his veto last month to opt out of the treaty, arguing that the UK needed to keep its authority over financial services in the City of London.

The eurozone crisis dominated Monday's summit, with debt-laden Greece still at risk of defaulting.

A general strike in Belgium, paralysing transport, reminded EU leaders of public discontent with austerity as they arrived for the summit.

The talks also concentrated on reducing unemployment, which is averaging 10% across the eurozone, though youth unemployment is often much higher.

There are fears that wide-ranging budget cuts will harm enterprise and training.

The leaders discussed measures to support small and medium-sized enterprises (SMEs), many of which complain of excessive administrative costs imposed by Brussels.

In a joint statement on economic growth they noted that cutting budget deficits was "not in itself sufficient".

"We have to modernise our economies and strengthen our competitiveness to secure sustainable growth," the statement said.

The EU will help to fund schemes to get young people into work or training in member states with the highest youth unemployment levels.

They pledged to speed up measures to develop the EU single market, including:

  • agreement on a common EU patent system by July;
  • better targeting of EU funds towards SMEs;
  • national legislation to create a functioning single market in services and energy.

The European Commission says 82bn euros (£69bn; $107bn) of EU money is available for countries to spend on projects to boost jobs and growth.


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  • rate this

    Comment number 486.

    The UK goverment will never have a better opportunity to renegotiate the terms of EU membership. The UK electorate want a referendum."

    And what mandate would a referendum give? To renegotiate terms within the EU; to leave totally even under humiliating and disadvantageous terms; to have the same terms as Norway and Swiss (which are essentially EU members but without influence)?

  • rate this

    Comment number 485.

    @480.Rebecca Riot
    "The Tory Euro sceptic cronies are here in droves this morning?"

    Less of the Tory please - of course, if you support this measure, perhaps you would tell us where you would cut the £154bn a year from the budget that this pact would require us to do?

  • rate this

    Comment number 484.

    480.Rebecca Riot
    Just now ..... "Labour will chase you and your bonuses, shady investments, spiv deals, offshore avoidance ... exposing you to ridicule and viliification in public .... pack your bags and skedaddle quick ... The game is up!!"
    ((((((-: Rebecca, you really are a "riot" ! "Labour" to the rescue, Ed on his white (sorry multi-coluroured) charger.

  • rate this

    Comment number 483.

    The UK goverment will never have a better opportunity to renegotiate the terms of EU membership. The UK electorate want a referendum. It is time we should at least threaten to withdraw from the EU complete with our billion of pounds membership fee. If they don't like tell them to lump it. We only want the Common Market.

  • rate this

    Comment number 482.

    Signing up is one thing,acting on it is another. Picture this as an election approachs a goverment decides to boost employment and the economy by public spending. The EU steps in with a fine. Politically feasible ?

  • rate this

    Comment number 481.

    Much ado about nothing.......

  • rate this

    Comment number 480.

    The Tory Euro sceptic cronies are here in droves this morning? Backing the wrong horse as usual?? Dave has a limp, had you not noticed??

    Labour will chase you and your bonuses, shady investments, spiv deals, offshore avoidance, out of the woodwork, exposing you to ridicule and viliification in public. Better pack your bags and skedaddle quick before the tax man catches you. The game is up!!

  • rate this

    Comment number 479.


    "Unless of course they are as stupid as us Brits"

    Of course they aren't. They will not let the Euro fail but they will not pay the cost of keeping it going. That's why they need 26 other member states to sign up to their Über-regulation.

  • rate this

    Comment number 478.

    This whole Euro mess is a vicious circle of economic decline. Germany's policies re S. Europe guarantee impoverishment of those countries, yet it depends on those same countries for a large chunk of exports. The 'German economic miracle' is in effect eating itself. Without serious global econ growth in the next year or so to float all boats, there's going to be major social disorder in the EZ.

  • rate this

    Comment number 477.

    461. ErrrorWayz

    My point was that had the UK been part of the € it would probably (possibly alone in the Eurozone) have stuck to the rules of the pact. The lower interest rates may well have caused much greater private debt, however. The question was hypothetical as we'll never know and we can all speculate and to no useful effect.

  • rate this

    Comment number 476.

    'A fiscal treaty to enforce budget discipline'?

    Well, that's hilarious and tragic, as the Germans who seem to want to do the enforcing were the first to break the EU rules on sovereign debt, thereby encouraging les autres, in the shape of France, Italy, Greece, Portugal, Spain, Ireland et al.

    Looks like just a new set of rules waiting to be broken - as they surely will. We are well out of it.

  • rate this

    Comment number 475.

    #469, Oh indeed this shows up the absurdity of the SNP project, become independent and then immediately try and join the EU and the Euro which will mean Scotland's budget being mainly determined by Brussels.

    "Independence in Europe" has to be the biggest contradiction in terms ever devised!!

  • rate this

    Comment number 474.

    It doesn't matter what they do - until we push on with the current system where the central bank loans money (with interest) to governments, there will ALWAYS be at least someone in huge debt. They can go on about stimulating growth and imposing new taxes; the so-called "crisis" will remain until we change the system.

  • rate this

    Comment number 473.

    David Cameron is just a front for the city...stop giving him credit for doing what all political figures would do in the UK if in power. They (who actually control the UK) don't want to be run by bureaucrats, when ironically most of the financial system was saved and is owned by the state.

  • rate this

    Comment number 472.

    the poison dwarf & her french toy boy still trying to go down in history, but what as ?. will the continentals never learn to recognise the good from the bad untill it's to late.

  • rate this

    Comment number 471.

    439.Little_Old_Me ... Germany won't leave the EZ ... Unless of course they are as stupid as us Brits

    I work for the German subsidary of a very large US company. The Germans I encounter are more rabidly anti Euro than even the posters here. The US owners are actively planning for the impact of a new German currency - including option of moving operations to the UK to maintain competitivness.

  • rate this

    Comment number 470.

    The british government veto and opt out will just make the U.K. a joke in the E.U. A toothless bulldog , shut up in the backyard of europe. This outdated self serving Con/libdems Government only care about the greedy bankers in the city of London shady dealings worldwide.

  • rate this

    Comment number 469.

    It would be interesting to get Alex Salmond's position on this!

    His idea that an independent Scotland could slash corporation tax would not go down well if he wants to be a member of the new-look EU. Scotland's disproportionate public sector would not be well received either.

  • rate this

    Comment number 468.

    EU fiscal compact? Are Germany, France and other members going to stick to it this time, probably not. Does it solve the immediate EU crisis, not at all. Even though I am pro european, we need to steer clear of this compact. It is not good for the EU that Germany are calling all the shots. Greece and Spain could well throw there toys out of the pram due to Germany insisting on deeper budget cuts.

  • rate this

    Comment number 467.

    But that is exactly what EU is all about.It is not about bringing prosperity and economic stability.It is about a handful controlling the majority.Shall I tell you what's next?Food control via Codex followed by a single world government.Days of ignorance are over,it is time to wake up and bring it all to an end using whatever means necessary.


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