25 EU members sign 'fiscal compact'

News Shopper: David Cameron speaks to the media at the EU summit in Brussels (AP) David Cameron speaks to the media at the EU summit in Brussels (AP)

Twenty-five EU countries have signed up for a new "fiscal compact" at a summit ceremony in Brussels.

Prime Minister David Cameron and his Czech counterpart sat it out - the only two EU leaders not to be endorsing a deal designed to impose stronger financial discipline on the eurozone, with sanctions for those countries breaching debt and deficit limits.

European Commission President Jose Manuel Barroso said afterwards: "In the eyes of the world, what is at stake is the very credibility of the euro area and of Europe as a whole: its ability to deliver sustainable fiscal consolidation, growth and employment.

"The euro is not just a currency of some countries, the euro is the currency of the European Union. Through their formal commitment at the treaty level to increase discipline and convergence, the member states are showing that, from monetary union, we are now progressing towards a true economic union."

Mr Barroso went on: "Contrary to all the negative prophesies about the future of the euro, and even of the EU, this agreement, with its binding rules in terms of reinforced governance, signals the irreversibility of the euro and a very important step forward in European integration."

He said the new Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union represented "the very culture of financial stability that is a prerequisite for true economic union".

He added: "I am convinced that the member states and the EU institutions are now in a much better position to complement these indispensable efforts on fiscal responsibility with further reforms for competitiveness and increased solidarity."

The 15-minute signing ceremony marked the end of months of effort to calm fears over the euro's fate. The resulting treaty or "fiscal pact" was forged after Mr Cameron dramatically vetoed plans for a 27-nation treaty change to beef up eurozone discipline.

Summit chairman Herman Van Rompuy, addressing the 25 signatories, said: "By signing, all of you commit to bring a strong fiscal rule into your national legislation, preferably at a constitutional level. It will have binding effects and a permanent character."

The president of the European Council said the stronger economic "self-constraint" enshrined in the new accord would help prevent a repetition of the sovereign debt crisis: "It will thus also reinforce trust among member states, which is politically important as well. The restoration of confidence in the future of the eurozone will lead to economic growth and jobs. This is our ultimate objective. "

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