EU summit: All but two leaders sign fiscal treaty

[dipsydoodle]

Source: BBC News

All but two of the EU's 27 leaders have signed a new treaty to enforce budget discipline within the bloc.

The "fiscal compact" aims to prevent the 17 eurozone countries again running up huge debts.

It must now be ratified by individual parliaments and, in the case of the Irish Republic, a referendum.

UK Prime Minister David Cameron, who with the Czechs refused to sign, said his proposals for cutting red tape and promoting business had been ignored.

Read more: http://www.bbc.co.uk/news/world-europe-17230760

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9.57am: Herman van Rompuy, the slighty gnomic president of the European Council, has given a little pep talk to the 25 heads of government who signed up to the new fiscal rulebook this morning.

Signing was the easy bit because now the 25 have to go back and ratify the treaty, which has been set up outside the usual EU structures because Britain and the Czech Republic refused to allow EU institutions such as the Commission to be invloved in enforcing the rules. Ireland, as we saw this week, is already planning a referendum.

http://www.guardian.co.uk/business/2012/mar/02/eurozone-crisis-live-eu-summit-growth

[Yo_Mama]

1. But what does it mean?

Apparently Rajoy of Spain announced that their budget deficit would exceed the limit. Is it a theoretical type of agreement or a more binding one?
http://www.reuters.com/article/2012/03/02/us-spain-economy-idUSTRE8211KO20120302

They had a binding law before, but even Germany ignored it. I really don't quite get this - how is a country with unemployment over 20% supposed to come anywhere close?

I'd be happy to sign onto an agreement with others that none of us would earn less than one million a year, especially if it allowed me to borrow money more cheaply. But I doubt I'd earn the money!

[dipsydoodle]

2. On the unemployment side you need to look at the background.

Over the past 20 years or so they had a massive drift from their tourist industry into construction. The construction industry died 2007. Their tourist industry had already ceased to be competitive too in some respects so generally speaking there are no jobs there either.

I'm wondering if for example the car manufacturs will open more factories there. VW and Peugeot/Citroen have both just applied for ECB funds with the intention of doubling their outputs. Aside from that I can only assume Spain will increase the size of its farming and agricultural industries to create more jobs.

[Yo_Mama]

3. The economic climate in Europe is difficult

European retail sales for December were down 1.6% over the year.

German retail sales for January were reported -1.6%, but some of that may have been weather.

It makes it very difficult for a country like Spain to build back up.

[denem]

4. Lets be clear: This is a Balanced Budget Amendment

to be audited and enforced in every member state by the EU commission.

A deficit of 1% will draw an inquiry.

A deficit of 3% will incur fines and sanctions,
by edict of the European Court.

It's more than irrational, it's Germany's
Fiscal Solution to the Eurozone Problem.