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EU leaders back new budget rules to stave off crises

Text by News Wires

Latest update : 2010-10-29

France and Germany have won support from their EU partners for limited changes to the Lisbon Treaty that would bolster the bloc’s defences against future financial crises.

REUTERS - The European Union on Thursday supported calls by Germany and France for limited changes to the bloc's main treaty to help shore up Europe's defences against any new financial crises.

EU leaders agreed at a summit that changes were needed to create a permanent system to handle sovereign debt problems and endorsed tougher budget rules, including sanctions on states that do not keep deficits and debt in check.
 
But Berlin failed to win widespread support for demands to suspend the voting rights of member states which breach the rules. This would have required more radical treaty change and will be looked at only after the other measures are dealt with.
 
The leaders asked Herman Van Rompuy, the president of the EU Council grouping national governments, to prepare changes to the Lisbon treaty in time for agreement at a summit in December and said he should work on them with the European Commission.
 
"Today we took important decisions to strengthen the euro zone," Van Rompuy told a news conference after discussions described by several participants as heated and emotional.
 
"We recommend a robust and credible permanent crisis resolution mechanism to safeguard the financial stability of the euro zone as a whole."
 
The changes to the treaty are to be agreed by mid-2013 and are part of Europe's efforts to ensure it can cope with any repeat of the Greek sovereign debt crisis this year which threatened the future of the euro.
 
Germany, Europe's biggest economy, says a permanent system must replace the ad-hoc 440-billion euro safety net created in May for all euro zone states. It also says it should be partly funded by the private sector and entail strict conditions.

 

Date created : 2010-10-29

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