Brussels - European Union (EU) leaders on Friday morning agreed to the establishment of a new "fiscal compact" based on inter-governmental treaties rather than the anticipated EU treaty changes.
Under the agreement, reached after 10 hours of tough negotiations,17 Eurozone members plus six other non-Eurozone EU states, would join the compact based on "inter-governmental treaties," said European Council President Herman Van Rompuy.
Britain and Hungary said they would not join the fiscal compact, while the Czech Republic and Sweden "have not yet a mandate to participate," according to Van Rompuy.
Strengthening fiscal disciplines through such a fiscal compact would be "much more rapidly and easier to approve and ratify," Van Rompuy told reporters after the first day of talks at the two-day EU summit.
"We all commit to a new European strong fiscal rule, which means member states will transpose it into their constitution or equivalent, reinforcing the rules on excessive deficit procedure by making them more automatic," Van Rompuy said.
He also said under the fiscal compact, member states will have to submit their draft budgetary plans to the European Commission, the EU's executive arm.
However, the European Council didn't reveal the details about the deal and Van Rompuy refused to answer a question about what are the concrete measures to punish those rule offenders.
French President Nicolas Sarkozy blamed Britain for the failure in achieving fully-fledged treaty changes among all EU member states.
Sarkozy said the British side was trying to be exempted from certain financial regulation in the name of EU treaty changes.
"We could not accept this because a lack of sufficient regulation caused the current problems," Sarkozy told reporters at a separate press conference after the summit.
The two day summit ends today.
