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Latest update: 09/12/2011
- Angela Merkel - David Cameron - European Union - eurozone - finance - France
All EU nations but UK open to joining 'new fiscal contract'
EU leaders in Brussels Friday said that 26 of its 27 member states are open to joining a new treaty tying their finances together to save the euro. The UK remains opposed, arguing the new treaty would threaten their sovereignty.
By News Wires (text)
AFP - European Union leaders, excepting Britain, banded together 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," German Chancellor Angela Merkel said as talks resumed Friday after a first 10-hour session winding up at 5:00 am.
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 in a statement.
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.
Some leaders hope this will spur the European Central Bank to step up its role in the crisis after ECB president Mario Draghi had called for a "new fiscal compact" last week.
Draghi dubbed the summit decisions a "very good outcome" for the eurozone.
But a day earlier he sent markets into a tailspin by saying that the ECB's purchase of troubled sovereign bonds was "limited" and "temporary".
Asian markets dropped as investors nervously awaited the final outcome of the marathon summit. Tokyo closed down 1.48 percent and Hong Kong slumped 2.73 percent.
Europe's main stock markets fell at the start of trading before rising later in the day in volatile trading.
French President Nicolas Sarkozy said British Prime Minister David Cameron's bid to halt ongoing EU efforts to curb the City of London's huge financial services sector was "unacceptable".
"Where we can't be given safeguards, it is better to be on the outside," retorted Cameron.
A square mile in central London is home to 75 percent of Europe's entire financial services industry, but the British government is resisting French and German moves to impose a financial transactions tax, as well as new regulations controlling trading.
Sarkozy said: "In order to accept treaty revision among the 27 EU states, David Cameron asked us -- something we all judged unacceptable -- for a protocol to be inserted into the treaty granting the United Kingdom a certain number of exemptions on financial services regulations.
"We could not accept this, since we consider, quite on the contrary, that a part of the world's woes stem from the deregulation of the financial sector.
While the leaders split over treaty changes, they pledged to pump 200 billion euros ($267 billion) into IMF coffers to help the eurozone, which is struggling to boost its own rescue fund to one trillion euros.
Sarkozy also said the ECB would act as an agent for the bailout fund, the European Financial Stability Facility (EFSF).
The EFSF's successor, the European Stability Mechanism (ESM), will come into force earlier than first mooted in July 2012, with a lending capacity of 500 billion euros.
Herman Van Rompuy, the EU's president, said a German-led drive to impose private-sector losses on Greek bondholders had been a one-off deal that would not be repeated.
This policy, which he admitted had had "a very negative effect on the debt markets" was "officially over", he declared.
But Germany won other battles, notably when EU leaders dropped the idea of pooling debt by issuing joint eurozone bonds.
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Comments (8)
Knock on effects
Because of the UK veto Ireland will have to hold a referendum on this new deal as it will now be classed legally as an inter governmental treaty rather than a modification of an existing treaty. Other countries may also be in a similar position. As everyone in Ireland is afraid Sarkozy will use this opportunity to dictate taxes there the Irish people will quite likely vote no unless they get some garuntees that this won't happen. Be prepared for eighteen months of mess, divisions and arguments, the new agreement to be delayed, altered or maybe even scrapped.
I'm now wondering which country will be the first to exit the eurozone.
E.U. Woes
Before the union, the states each has their own currency. Then they tried what Europe is now trying. It did not work. Only when the stares gave most of their power to a central government did it work.
Europe will eventually have to do the same or all will be lost.
Who rescued what?
Cameron saved the EU?
Agreed, by effectively having the UK drummed out of it.All we need now is for the Lib Dems to maintain support for the coalition and all will be well.
Cameron did everything expected of the 'son of Thatcher', with one exception, he failed to smack Merkozy with her Ladyship's handbag.
Why are the British so adept at screwing themselves?
Thanks to the coalition government, that outfit so full of Euroskepts on one side, and two faced Lib Dems on the other, we may now take some comfort in the fact the UK is condemned to the fringes of decision making in Europe for the foreseeable future, certainly as long as we refuse to agree to anything that may possibly impact on those mega rich pals of the Tory party in the City.
If through this our exports begin to suffer, as the Europeans crank up their own efforts, by which time hopefully Cameron will be yesterday's man, maybe a new window of full cooperation with our Continental'partners' will lopen, and we may get a chance to nrepair the damage before Europe gets really shirty and erects both high tarrifas against our goods, and places difficultuies to anyone attempting to expand into Europe.
I know if it were me in Merkozy's place, I would be most sceptical of doing any further business, at least until these who have fractured what little credence we had are replaced by a new regime. A regime with some degree of care for the majority in our land, and not just for those who play Monopoly with the nations economic well being.
Being European
I want it known that I consider myself to be European and that Cameron does not speak for me or my wife.
Danger! Euro!
Les problèmes du zone euro sont les résultats inévitables d’un système mal conçu, mal réalisé, et mal gouverné. La France, l’Allemagne, les pays Bas, etcétéra, ça marche avec une monnaie unique. Mais l’Italie ? La Grèce ? Ces pays étaient et restent bien dehors des règles nécessaires pour que l’euro soit possible. Les politiciens ont fermé les yeux aux ruses et aux abuses commises par des administrations corrompues et inefficaces. Tout ceci n’a rien à faire avec la Grande-Bretagne.
On a vu hier un sale tour de la part de Sarkozy et Merkel qui ont essayé d’imposer une solution politique au nom de l’UE, quand il faut une solution financière au nom de l’euro.
Sachez bien : nul pays ne fait partie de l’UE que pour les bons que peuvent être réalisés pour le pays soi-même. Les pays du sud, et maintenant ceux de l’est, ont vu la possibilité de la croissance économique grâce à l’aide des autres pays. Pour eux c’est une bonne planque ; pour nous c’est un trou noir où disparaissent les taux de nos citoyens, pour réapparaître dans les poches des fonctionnaires grecques. C’est ça pourquoi la Grande-Bretagne a droit et raison pour ne pas faire partie de ce manœuvre Franco-Allemand.
The crisis in the eurozone is
The crisis in the eurozone is entirely self made.The political decision was made to keep the value of the euro low to encourage exports.The main exporting country in the eurozone is Germany,and this policy has boosted German exports.Unfortunately the low value of the euro means that imports are more expensive with the result that countries which have few exports are paying more for their imports with no compensating export income,consequently they are financially diadvantaged.But Germany does well.Another way to increase or decrease the value of a currency is to manipulate the interest rate.With a high interest rate people invest in that currency to obtain that high rate.Buying euros as investment increases the value of the euro.The political decision was also made to keep the euro interest rate low in order to maintain a low value euro.this has also hurt the economies of the non-exporting nations.Low interest rates also tempt weak goverments to borrow cheaply,and possibly unwisely.Greece,Italy,Spain,Portugal and Ireland have all borrowed unwisely and cannot repay their debts.This would not have happened if the euro had been subject only to market forces and had been allowed to increase in value as exports increased because both the cost of the euro and its rising interest rate would have made such excessive borrowing too expensive.It is the political decision to have a low value and low interest rate euro which has created this crisis.The solution is to allow market forces to control the value and interest rate of the euro,which must both rise.Germany will not like it because it will reduce their exports,but market forces will also control the borrowing
UK-EU Relations
The tone of this article sets out exactly why the UK couldn't sign up to this treaty. The financial services sector is makes up the core of our economy. 75% of financial transactions in the EU happen in Londons Square Mile.London is the financial capital of the world whether France or Germany like it or not. A tax on financial transactions is a tax on the UK. Business would flee London in droves for the US, Middle east and Asia to avoid paying it. Why can't Sarkozy and Merkel see how this would ruin the UKs economy? We could never sign up to that. How can Sarkozy talk of the UK being selfish, when France still claims the lion share of the CAP funds so it can pay unsuccessful vineyards to make wine they can't even sell? The French and Germans talk of the UKs isolation is doing nothing to help Pro-EU Brits like me to stop the UK from leaving the greatest political union in history. There is a reason we have the greatest financial services industry in the world. We are the best at it. You should be begging us for advice not ignoring us.
Cameron saved the EU
The EU was saved by Cameron. The EU Treaty was crafted over years to bring Europe together but ensure that no one nation could grab control and make the rest subserviant. merkle ,by design or not, was working to over a single night, replace the EU Treaty with a new treaty that would have made all Europe subservant to whomever had the biggest economy. The only way out would be for a country to quit the Treaty/New EU entirely. Thus, Cameron saved the EU
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