EU reaches deal on tighter budget discipline: sources

15th September 2011, Comments 0 comments

The European Parliament and EU states have reached a compromise to tighten budget rules, seen as vital to prevent future debt crises, parliament sources said on Thursday.

"There is an agreement in principle" on a set of legislative proposals known as the "six-pack" following negotiations on Wednesday, one of the sources told AFP, ending months of deadlock over the issue.

Under the deal, countries running excessive deficits will have to deposit money in blocked accounts, with more automatic sanctions than in the past to punish budget sinners in Europe.

The compromise will now be presented to European Union finance ministers meeting in Poland on Friday for their approval, the source added.

Two other parliament sources, speaking on condition of anonymity, confirmed the deal after talks between Poland, which currently chairs EU government meetings, and the parliament's lead negotiators.

"We have an agreement with the Polish presidency (of the EU) but we must verify that the other countries are in sync," one of the sources said.

The overhaul of the EU's Stability and Growth Pact, which has failed to stop countries from breaking deficit and debt ceilings, was proposed by the European Commission after the Greek debt crisis erupted last year.

Few countries in the 27-nation bloc respect the rules, which limit public deficits to 3.0 percent of gross domestic product and debt levels to 60 percent of GDP.

The parliament has asked for the axe to fall automatically on nations violating the rules, while governments insisted on having the last word on such decisions. The two sides appear to have found a middle ground.

© 2011 AFP

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