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EU leaders sign fiscal treaty

Friday, March 02, 2012 - 02:19

Mar. 2 - Leaders of 25 of 27 EU states signed a fiscal treaty during a two-day summit in Brussels, but they said they would decide before the end of March whether to increase its debt crisis firewall. Joanna Partridge reports

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A new fiscal treaty for Europe is signed in Brussels. Leaders of 25 of the EU's 27 member states agreed to introduce common debt rules among the 17 countries which use the euro. Britain and the Czech Republic refused to sign the treaty, which the EU created at the height of the euro zone debt crisis. National parliaments will now ratify the compact. German Chancellor Angela Merkel had pushed for the treaty in exchange for helping struggling nations. For the first time in around 18 months, the mood in Brussels was cautious, but more upbeat. SOUNDBITE: German Chancellor, Angela Merkel, saying (German): "It would be wrong to say this was an ordinary European summit just because we concluded business before midnight. After all it was a European Council meeting where, it is true, we didn't have to contend with the immediate crisis as such, but we certainly had to deal with the fall-out of if, particularly as the activities of the European Central Bank have driven it home to us once again that we are not living in, as it were, ordinary times." The European Central Bank has put the onus back on the leaders to act after lending over 500 billion euros to banks. But the euro zone says it won't decide yet whether to increase the size of its rescue fund. The leaders are also looking at ways to boost growth as austerity bites and unemployment rises. Greek Prime Minister Lucas Padademos welcomed that shift in focus. SOUNDBITE: GREEK PRIME MINISTER LUCAS PAPADEMOS SAYING (Greek): "I'm returning to Athens this time feeling more optimistic about the decisions taken at the EU Summit. After the meetings I had with the President of the European Commission, Jose Manuel Barroso and commissioners, it's clear growth is Europe's top priority." There are concerns cuts have gone too far. Spain's economy is forecast to shrink by at least 1% this year and it has the highest unemployment rate among developed countries. As a result it's defied the EU by setting a deficit target of 5.8% of GDP instead of the 4.4% goal agreed with Brussels. That leaves the EU with a dilemma - punish Spain or be flexible as everyone battles to restart growth. Joanna Partridge, Reuters

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EU leaders sign fiscal treaty

Friday, March 02, 2012 - 02:19