EU signs new fiscal austerity treaty

Following meetings in Brussels last week, 25 of the 27 European Union states on Friday signed a new fiscal treaty, committing to avoid a budget deficit exceeding 3%.

In a speech by the President of European Council Herman Van Rompuy during the signing ceremony, Van Rompuy highlighted the importance of restoring confidence in the eurozone. He said: “The restoration of confidence in the future of the eurozone will lead to economic growth and jobs. This is our ultimate objective.”

The treaty, largely inspired by the German government, was received warmly by Ms Merkel, German Chancellor, who described it as a “step towards political union in Europe.”

French President Nicolas Sarkozy reiterated that the eurozone had found a path out of the crisis. In a press conference held after the summit, he said: “We’re turning the page on financial crisis. The strategy we’ve implemented is bearing fruit.”

Despite positive reception from the participating members, the task of ratifying the agreement in their respective nations still remains.

“But first, after today’s signature, comes the moment of ratification,” Mr Rompuy stated, adding: “You now all have to convince your parliaments and voters that this treaty is an important step to bring the Euro durably back into safe waters. I am most confident you will succeed.”

The accord will also have to survive Ireland’s popular referendum. The Irish government reassured the European Union that, given the current economic circumstances, the Irish public would definitely vote “yes”, in contrast to the previous two votes that rejected EU treaties.

If any country fails to ratify the agreement, they will immediately lose access to EU funds and be opted out from receiving any bails out in the near future.

Rajeeb Gurung