EU leaders' 'fiscal compact' to tackle eurozone debt crisis aims to co-ordinate economic policies with a ceiling on deficits
European Union leaders agreed on a new "fiscal compact" to tackle the eurozone's debt crisis on Friday, but failed to win consensus for it to be backed by a new 27-state treaty after Britain held out for safeguards to its financial sector.
Here are the main points of the agreement, reached in the small hours of Friday after overnight talks.
• EU leaders described the deal as based on a new "fiscal compact" and "on significantly stronger co-ordination of economic policies in areas of common interest".
• Eurozone states' budgets should be balanced or in surplus; this principle will be deemed respected if, as a rule, the annual structural deficit does not exceed 0.5% of gross domestic product.
• Such a rule will also be introduced in eurozone member states' own national legal systems; they must report national debt issuance plans in advance.
• As soon as a eurozone member state is in breach of the 3% deficit ceiling, there will be automatic consequences, including possible sanctions, unless a qualified majority of eurozone states is opposed.
• The European Stability Mechanism (ESM), the eurozone's permanent bailout fund, is aimed to enter into force in July 2012; the existing European Financial Stability Facility (EFSF) will remain active until mid-2013. The overall ceiling of the EFSF/ESM of €500bn (£426bn) will be reviewed in March 2012.
• Eurozone and other EU states will confirm within 10 days the provision of funds to the IMF of up to €200bn in the form of bilateral loans to help it deal with the crisis.
• Voting rules in the ESM will be changed to allow decisions by a qualified majority of 85% in emergencies, although that remains subject to confirmation by the Finnish parliament.