European Council concludes discussion on the new fiscal compact
© European Union, 2011
President of the European Council Herman Van Rompuy and
President of the Commission José Manuel Barroso at the press
At the end of the 8-9 December EU summit in Brussels,
the President of the European Council Herman Van Rompuy confirmed
that the 17 members of the euro area and several other EU countries
were ready to participate in the new fiscal compact and engage in a
significantly stronger coordination of economic
The goal of the compact, as a response to the current crisis, is
to strengthen fiscal discipline and introduce more automatic
sanctions and stricter surveillance.
The fiscal compact agreed today will be made legally binding by
an international agreement. The agreement will be open to the EU
member states that are currently not members of the euro area. All
EU member states apart from one said they were considering
The precise number of participating countries will be known
after the national parliaments have been consulted. "I am
optimistic because I know that it is going to be very close to 27",
said Van Rompuy. "In fact, 26 leaders are in favour of joining this
effort. They recognise that the euro is a common good."
The main elements of the fiscal compact include a requirement
for national budgets to be in balance or in surplus (the structural
deficit should not exceed 0.5% of nominal GDP) and a requirement to
incorporate this rule into the member states' national legal
systems (at constitutional or equivalent level).
Member states undergoing an excessive deficit procedure will
have to submit to the Commission and the Council for endorsement
the structural reforms they plan to take in order to meet the
requirement to correct excessive deficits.
The member states will also have to report on their national
debt issuance plans.
The international agreement may be signed in March or earlier.
The objective remains to integrate these provisions into the
treaties of the Union as soon as possible.
Herman Van Rompuy declared that the European Stability Mechanism
(ESM) treaty will be finalised in the coming days with the aim of
ratifying it by mid-2012.
The heads of state and government also declared that the rules
governing the excessive deficit procedure will be reinforced for
the euro area. There will be "automatic consequences" unless a
qualified majority of euro area member states vote against. The
member states would also have to vote by qualified majority to stop
the Commission from imposing sanctions.
The member states are also committed to coordinating their
economic policies and working towards a common economic policy.
Statement by the euro area heads of state and
European Council conclusions (pdf)
Press statement by the President Herman Van
Press conference webcast
European response to the crisis
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