News / Europe

Most EU Countries Accept New Fiscal Deal

Britain's Prime Minister David Cameron (C) looks at Germany's Chancellor Angela Merkel (L) at a European Union summit in Brussels, December 9, 2011.
Britain's Prime Minister David Cameron (C) looks at Germany's Chancellor Angela Merkel (L) at a European Union summit in Brussels, December 9, 2011.

Most members of the European Union agreed to a new deal Friday that is intended to address debt problems that have threatened the common euro currency and driven Europe into an economic crisis. The agreement increases EU supervision of government budgets of member nations.

France and Germany pushed hard for the deal.

After tough negotiations in Brussels, all 17 European Union members that use the euro, and some other EU nations, agreed to the plan.

That pleased German Chancellor Angela Merkel.

"I am very pleased with the results of yesterday's talks - this is not a foreign compromise for the sake of the Euro. Across the world, people will see that we've learned from mistakes made in the past," said Merkel.

EU leaders hope financial markets will be reassured by the plan's long-term solution to the eurozone government debt crisis. Greece, Portugal and Ireland have already received international bailouts because of their debt, and some analysts feared even greater needs from Spain and Italy.

EU leaders also agreed to give the International Monetary Fund another $260 billion for programs to keep the current crisis from spreading.

But Britain rejected the deal. It is the strongest of the EU nations that do not use the euro and a major financial center. A proposed tax on financial transactions was one of several issues that raised concerns for British Prime Minister David Cameron.  

"What is on offer isn't in Britain's interests and I didn't agree to it," said Cameron.

Stock markets and the value of the euro rose Friday after the deal was announced.

Economists were split about whether the deal would do enough to prevent future fiscal crises and solve the current problems.

In Frankfurt, Germany, Chris Zwermann, of Zwermann Financial, said it may be just as well that Britain did not agree to the deal.  

"We get the possibility to make decisions for the Euro countries, which means 17 countries without any influence from other countries who don't belong into this area," said Zwermann.

Deutsche Bank's Stefan Schneider welcomes the agreement to enforce deficit limits.

"Because otherwise, you know, something, 'just let's pull the check book and write a check' - I think that ultimately would cause a serious problem in terms of democracy," said Schneider.

The deal needs final ratification by member countries, and could be signed by March.

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