European Union finance ministers have agreed tougher rules against counties’ excessive borrowing and imbalances of their economies.
As part of the revamped Stability and Growth Pact, financial sanctions against rule-breakers will come in automatically and more quickly.
The move is aimed at making investors more confident that governments will not default on their borrowings, with the hope of ending the sovereign debt crisis.
“The Council agreed a general approach on a package of measures aimed at strengthening economic governance in the EU – and more specifically in the euro area – as part of the EU’s response to the challenges highlighted by recent turmoil on sovereign debt markets,” conclusions of the meeting said.
Previously sanctions against offenders were dependent on political horse-trading among EU finance ministers.
After the European Commission proposed last September to make sanctions almost automatic for those who break the rules, France and Germany managed to water down the proposal.
But over the weekend euro zone leaders agreed that a call by the Commission to penalise a country should, as a rule, be followed by finance ministers. If not, the ministers must explain themselves in writing. The ministerial agreement on Tuesday therefore returned to the original Commission proposal.