UK and Czechs refuse to join fiscal compact

Wednesday, 01 February 2012 10:47

Written by Editor

Twenty-five of the EU's 27 member states agreed to join a fiscal treaty on Monday to enforce budget discipline, with the Czech Republic and the UK refusing to sign up. UK Prime Minister David Cameron said his government would act if the treaty threatened UK interests, saying he still has "legal concerns" about the use of EU institutions in enforcing the fiscal treaty.

French President Nicolas Sarkozy said the Czechs had given "constitutional reasons" for their refusal. The Czech Republic is not yet in the euro but, like the other new EU member states, it is committed to joining.

The treaty's goal is a 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 – is very 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. 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. The European Commission said €82 billion of EU money is available for countries to spend on projects to boost jobs and growth.

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.