Perilous Times and The Revived Roman
Empire
Most of EU nations to sign new financial co-operation treaty
January 31, 2012
AP
All European Union countries, except Britain and the Czech Republic,
have agreed to sign a new treaty designed to stop overspending on
the eurozone and put an end to the bloc's crippling debt crisis,
while also pledging to stimulate growth across the region.
The new treaty, agreed at a summit of European leaders in Brussels
on Monday, is known as the fiscal compact and includes strict debt
brakes and makes it more difficult for deficit sinners to escape
sanctions.
The 17-country eurozone hopes that the tighter rules will convince
investors that all countries will get their debts under control and
restore confidence in their joint currency.
"We have a majority of 25 that will now sign up to the fiscal
compact," said Swedish Prime Minister Fredrik Reinfeldt.
Although the new rules only apply to the 17 euro states, the
currency union was hoping to get broad support from the other EU
states, in the hope that the accord could eventually be integrated
into the main EU treaty.
Britain had already said in December that they wouldn't sign the new
treaty. Reinfeldt said that the Czech Republic didn't sign because
of parliamentary procedural problems.
The Swedish prime minister said it he decided Sweden should join
even though it does not use the euro because the new accord gives it
more influence on policy within the currency union.
The summit also promised to stimulate growth and create jobs across
the region, in a tacit acknowledgment that their exclusive focus on
austerity has had painful side effects.
Earlier on Monday the meeting pledged to offer more training for
young people to ease their transition to the workforce, deploy
unused development funds to create jobs, reduce barriers to doing
business across the EU's 27 countries, and ensure that small
businesses have access to credit. However there was no offer of any
new financial stimulus.
"We must do more to get Europe out of the crisis," they said in a
statement.
The European Commission, the EU's executive, says that there are
still 82 billion euros ($A102.33 billion) in development funds that
have yet to be allocated, and the statement from Monday's summit
said they should be "rapidly" committed to projects focused on
growth and job-creation.
Europe's debt crisis has put the continent and its leaders in an
almost impossible situation.
While they have to slash their deficits to reassure investors
reluctant to lend to them, the debt crisis has also hammered the
so-called "real economy", sending unemployment soaring.
Many analysts, politicians and trade unions think that only
government spending can restart growth.
Overall, 23 million people are jobless across the EU, 10 per cent of
the active population.
In Spain, unemployment has soared to nearly 23 per cent and is
nearly 50 per cent for those under age 25, leaving more than five
million people - or almost one out of every four - out of work as
the country slides toward recession.
Even countries in the so-called European "core" - which are
generally better off - are suffering. The French government was
forced on Monday to revise down its growth forecast for the year
from one per cent to just 0.5 per cent.
In fact, many now fear that Europe is on the verge of another
recession, and leaders gathering in Brussels said that while
austerity is important, more needs to be done for growth.
Economists often note that cutting spending is just one way to slash
deficits; another equally important method is to boost growth, which
increases the amount of money pouring into government coffers.
While the leaders meeting in Brussels focused on walking the fine
line between reining in spending and stimulating growth, the
elephant in the room was Greece.
Greece and its bondholders have come closer to a deal to
significantly reduce the country's debt and pave the way for it to
receive a much-needed 130 billion euros bailout.
French President Nicolas Sarkozy said he hoped a final agreement on
Greece will be achieved "in the coming days", either at a special
meeting of eurozone finance ministers or leaders.
Negotiators for Greece's private creditors said on Saturday that a
debt-reduction deal could become final within the next week. If the
agreement works as planned, it could help Greece avoid a
catastrophic default, which would be a blow to Europe's already weak
financial system.
But European officials are afraid that even that deal may not be
enough to fix Greece's finances, with some blaming Athens for
dithering on its promise to cut spending and introduce austerity
measures.