A new intergovernmental treaty would set tighter budget rules and strengthen economic coordination as a means of tackling the debt crisis and restoring market confidence.
At the European Council meeting of 8-9 December, 26 out of 27 member states have decided on a strong response to the immediate crisis and on opening the way to an intergovernmental treaty for greater integration, discipline and convergence. The new treaty should ensure the respect of the EU's newly tightened rules on debt and deficits.
EU leaders also agreed to fast-track measures already on the table for more discipline and stability and others that boost jobs and growth.
The main points
- On debt and deficit, the decisions taken further strengthen the already massively reinforced framework for budgetary discipline and economic policy coordination in the euro area, notably the reinforced Stability and Growth Pact and the new macro-economic surveillance entering into force on 13 December. The European Council also has called on the Council and Parliament to fast-track agreement on the two Article 136 Regulations proposed by the Commission in November, which will further enhance ex ante fiscal surveillance and the solidity and credibility of budgetary processes in the euro area – so that they enter into force in time for the 2012 budgetary cycle. On top of this, the participating countries, up to 26, will sign an intergovernmental treaty in which they will enshrine their further commitments to:
- support recommendations the Commission makes in the framework of the Excessive Deficit Procedure, leading to greater automaticity;
- adopt a balanced budget rule at constitutional or equivalent level, and recognise the jurisdiction of the Court of Justice to verify its transposition;
On the financial stability of the euro area, the European Council also sent a strong signal to investors of their commitment to defend the euro.
They agreed that:
- the European Stability Mechanism (ESM) should enter into force in July 2012 instead of July 2013
private sector involvement in the Greek debt reduction programme will remain a unique one-off case and the ESM's clause on PSI will be kept to the preamble and will be fully in line with IMF principles and practises
- urgent decisions in the ESM can be taken by qualified majority.
- the adequacy of the combined ceiling for the EFSF and ESM of €500bn will be reassessed in March 2012
- euro area and other member states will confirm in 10 days whether they can provide up to €200bn in additional resources to the IMF, through bilateral loans, to ensure it has adequate resources to deal with the crisis
Focus on growth and jobs
All 27 EU governments agreed to speed up priority growth and job measures. These include completing the integration of the EU's energy markets, the development of a more connected infrastructure, and achieving better energy efficiency.
Further EU enlargement
Croatia signed its accession treaty with the EU on 9 December and will soon hold a referendum to decide whether the country will join the EU on 1 July 2013.
More on the European Council meeting 8-9 Dec.