EU wants fiscal pact in force by Jan 2013: draft
By John O'Donnell and Julien Toyer
BRUSSELS (Reuters) - A European Union treaty to tighten budget controls in the euro zone should be in place by January1, 2013, according to a draft agreement that spells out concessions in an effort to win broad support within the debt-laden bloc.
Drafted amid a deep-seated crisis that threatens the currency union's future and has sent borrowing costs soaring for many states, the document obtained by Reuters on Wednesday sets out a temporary escape clause for members that cannot meet the stricter new standards.
It would allow euro zone countries to spend more than they earn during severe economic downturns.
States including Italy, which has debt in excess of 110 percent of national output and servicing costs close to unsustainable levels, had lobbied against stricter treatment of heavily indebted countries.
"There were concerns that the rules would be stricter than the current EU laws on debt," said one Italian diplomat. "The new treaty will keep the current rules, including mitigating factors."
The treaty, which is being pushed through largely at Germany's insistence, will also make it possible to bring spendthrift countries to court, a move Berlin believes adds clout to the new regime of stricter spending rules.
But reaching agreement among the 26 other states that are expected to sign up to the pact for the euro zone is complicated, and delays could further add to the political uncertainty that has unnerved investors throughout the crisis.
In an apparent attempt to court Britain, which opted out of the pact at a summit last December and is now at odds with the push for closer cooperation among the rest of the EU, a reference to single market integration has been removed. Continued...