EU: New debt law in March

Tim Wallace
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A NEW EU treaty could be negotiated by March despite the UK’s veto at Friday’s summit, European Council president Herman Van Rompuy announced yesterday.

Europe’s bailout mechanisms may also need boosting, he told MEPs.

The 26 nations that did not veto new proposals to ban governments from running up large debts can still negotiate the rules among themselves, diplomats believe, and only parliaments in Sweden, Hungary and the Czech Republic will get a chance to vote on the changes.

These countries “recognise the euro is a common good”, Van Rompuy told the European Parliament yesterday.

“Early March at the latest, this fiscal compact treaty will be signed.”

The legal process will be tricky, as the treaty will not follow the usual EU processes, but it must be “negotiated as a matter of urgency, bearing in mind what is at stake”, he said.

Market confidence fell after the summit last week failed to come to an agreement and ratings agencies threatened to downgrade euro states.

Van Rompuy told the parliament that financial resources needed boosting to “overcome current difficulties.”

The European Financial Stability Fund (EFSF) did manage to sell €1.971bn (£1.66bn) in three-month debt yesterday with a yield of 0.22 per cent. The issuance was firmly oversubscribed, in contrast to the €3bn debt issued to support Ireland in November that nearly failed.

Promising further measures to beef up bailout funds, Van Rompuy said the European Stability Mechanism’s €500bn ceiling will be reviewed in March. However, “confidence that has gone can’t be restored overnight,” he conceded.