Pact for budget discipline signed by 25 EU states

By John O’Donnell – All but two European Union countries signed a treaty on tighter budget discipline for the euro zone on Friday (Mar 2, 2012), marking a coup for Germany which pushed for the accord to try to prevent a repeat of the loose spending that led to a debt crisis.

Only Britain and the Czech Republic did not sign the ‘fiscal compact’, under which countries in the euro zone are bound to write a ‘golden rule‘ on balanced budgets into their national constitutions or equivalent laws, with automatic correction mechanisms if the rule is breached.

“We have the two instruments,” German chancellor Angela Merkel told reporters. “On the one hand, the fiscal pact, and, on the other, the permanent European rescue mechanism. The two are interlinked.” more>


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