EU stitches fiscal union, at a big political price | business | Hindustan Times
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EU stitches fiscal union, at a big political price

business Updated: Dec 09, 2011 21:04 IST

European Union (EU) 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,” said Angela Merkel, German Chancellor.

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.

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.