25 out of 27 EU states have signed the Budget Pact. The UK and Czech Republic refused to sign the document, unwilling to allow the European Commission to interfere in their domestic policy, ITAR-TASS reports.
The new agreement boosts integration, creation of workplaces and economic development in Europe, EU President Herman von Rompuy said.
The Budget Pact was developed by Germany and France and will be the basis for the financial and banking markets of the eurozone and the EU as a whole. It limits the financial policy of eurozone members.
Budget deficits must not exceed 0.5% of notional GDP, according to the document. States with low state debt are allowed to have a deficit of 1%. The debt of all EU states must not exceed 60% of GDP.
States exceeding the 60% limit (which is 24 out of 27 states) must reduce it by at least 5% a year.
All EU states are to implement the document in their Constitutions. The process will be monitored by the European Court of Justice. Delayed implementation is punishable by a fine of 0.1% of GDP, with the sum allocated to the EU Financial Stabilization Fund.
The European Commission will monitor the budget deficit and state debt. A budget deficit of 3% will launch an automatic mechanism to correct it.
The Budget Pact is an important step, but not the final one. 25 states are yet to ratify the document. It will come into force as soon as it is adopted by 12 states. It will take about a year.
Ireland is the only state to announce a referendum on the pact. Other states plan to vote on the Budget Pact in their parliaments.
