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EU SUMMIT: ALL BUT TWO LEADERS SIGN FISCAL TREATY

By NBF News

Herman Van Rompuy: “Growth and jobs… our ultimate objective”

All but two of the EU's 27 leaders have signed a new treaty to enforce budget discipline within the bloc.

The “fiscal compact”  aims to prevent the 17 eurozone states running up huge debts like those which sparked the Greek, Irish and Portuguese bailouts.

To take effect, the pact must be ratified by 12 eurozone states.

UK Prime Minister David Cameron, who with the Czechs refused to sign, said his proposals for cutting red tape and promoting business had been ignored.

But the newly re-appointed President of the European Council, Herman Van Rompuy, said British calls to boost the EU economy were being taken seriously and he had sought to re-draft the summit's conclusions accordingly.

Critics argue that the pact is mainly a political gesture aimed at reassuring taxpayers in Germany, the eurozone's dominant economy, where there is reluctance to pay for further eurozone bailouts.

German Chancellor Angela Merkel described its as a “great leap”, a first step towards stability and political union.

The pact emerged after Mr Cameron vetoed plans to change the EU treaties to enforce greater budgetary discipline back in December.

These new powers may face an early test as both Spain and the Netherlands have admitted they will miss targets for reducing their deficits, BBC Europe editor Gavin Hewitt reports.

While there has been a change of emphasis at this summit, “from crisis mode to growth mode” in the words of one senior official, it will be difficult to achieve whilst tough spending cuts are being made, Gavin Hewitt adds.