MOST countries will not get a vote on tighter fiscal integration, allowing Germany to force through new financial controls across the Eurozone, European Council president Herman Van Rompuy said yesterday in a report sent to EU leaders ahead of tomorrow’s two-day summit.
US Treasury secretary Tim Geithner added his weight to efforts to resolve the crisis rapidly, saying reforms now would lay the foundation for future economic growth.
France and Germany want new rules by which countries would be “automatically” punished if they run deficits of over three per cent of GDP.
By changing only protocol 12 of the EU treaty, which relates to “excessive deficits,” Van Rompuy believes the proposed changes “do not require ratification at national level”.
This means “rapid and significant changes” can be introduced to stop any repeat of the current debt crisis.
“It is crucial to enhance the credibility of our budgetary rules and to ensure compliance,” said Van Rompuy, which will help “restore market confidence in the Eurozone.”
The report also outlined plans to keep national debts below 60 per cent of GDP, and followed German plans for a “golden rule” on balanced budgets.
In October, opposition from Slovakian politicians nearly derailed changes to the bailout fund, and the country’s government fell in passing the measure.
Although much of the detail is still to be discussed, French PM François Fillon did warn that it could take until late 2012 to ratify new fiscal controls.
Van Rompuy hopes to avoid such delays on the basis that enforced fiscal restraint will give the European Central Bank the confidence it needs to give more support to weak banks and governments, helping to end the crisis.
Global markets rallied late last night on reports that Eurozone officials are in talks to ramp up the currency’s bailout fund to close to €1 trillion, by allowing an existing pot of cash to continue running once a new package is introduced in 2012.
More details are expected to emerge during the summit.