New Treaty for Eurozone, But Britain Opposed

Posted December 9th, 2011 at 9:30 am (UTC-5)
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Most European leaders agreed to a proposed revision of EU treaties to require more budget discipline and other measures designed to address the continent’s debt crisis.

All 17 EU members that use the common euro currency agreed to the plan, promoted by Germany and France, at an EU summit Thursday and Friday. Some non-eurozone countries also agreed, but Britain – the strongest of the 10 non-euro countries, said it was still opposed.

A draft EU statement from the summit in Brussels said the leaders of nine non-euro countries “indicated the possibility to take part in this process” after consulting their parliaments.

France and Germany wanted to change the EU treaty to require more central oversight of individual government budgets, and a penalty clause for countries that exceed their budgets. Those changes are designed to avoid a repeat of the government debt crisis in Greece, Italy and other countries that has threatened the currency union. The proposed changes also call for a unified corporate tax rate and a new financial transaction tax.

Britain expressed concerns that the plan would undermine its sovereignty. One country can block changes in overall EU treaties, but French President Nicolas Sarkozy said having agreement by all the eurozone countries was acceptable as a first step.

The economy in the 17 eurozone nations has all but stalled, with some analysts saying it has already dipped into a recession. The European Central Bank took a modest step ahead of the summit to trim its prime interest rate.

Fears that Europe’s debt crisis could spark additional problems have sent jitters through global financial markets and prompted warnings from several top credit rating agencies.