The
EU had set a deadline to come up with a solution to the immediate
problems. A meeting was held yesterday to work out the response
to their problems, Nearly 10 hours of talks could not produce
an agreement involving all member states. Instead, the 17 members
of the eurozone will work on a separate deal outside EU treaties.
They will be joined possibly by nine other countries, the EU statement
said, leaving the UK as the only exception.
The EU came up with the idea that a new treaty would be drafted,
which required all member states to reduce their sovereign debt,
and keep it down, otherwise sanctions would be imposed. The idea
seems to be a bit self defeating.
The ECB [European Central Bank] has decided not to help individual
governments, but rather help the banks to ‘ring fence’
their accounts. That is to keep depositors money separate from
the riskier investment side of their business.
There was speculation that the ECB may be preparing to increase
its purchases of Italian sovereign debt providing Eurozone governments
agree to tough new limits on their borrowing and on economic reforms.
But Mr Draghi appeared to rule this out when he announced: "We
have a treaty that says no monetary financing to governments."
This set back comes hard on the heels of Standard and Poor's announcement
that they had put almost all euro zone countries on "credit
watch". Meaning that six countries with top AAA ratings,
including Germany and France, have a 50% chance of seeing their
credit ratings downgraded.
David Cameron went to Brussels with the intention of securing
a deal; that would protect the City of London. He had created
a lot of bad feeling with Nicholas Sarkozy in the past, who had
accused Cameron of attempting to derail the summit. The German
Chancellor, Angela Merkel had previously accused Cameron of being
selfish over his demands.
Cameron had been side lined by the EU on several occasions because
of his attitude to the EU, we are now the only country in the
EU not to agree to the new treaty.
The Agreement thrashed out yesterday leaves the UK in a position
of Brussels being able to impose laws on this country, with Cameron,
parliament, or the British public having a say over the matter.
There are some 49 new rules and regulations aimed at the City
Of London which Cameron failed to get a deal on.
The deal agreed yesterday was:
• A cap of 0.5% of GDP on countries' annual structural deficits
• "Automatic consequences" for countries whose public
deficit exceeds 3% of GDP
• The tighter rules to be enshrined in countries' constitutions
• European Stability Mechanism (ESM) to be accelerated and
brought into force in July 2012
• Adequacy of 500bn-euro (£427bn; $666bn) limit for
ESM to be reassessed
• Eurozone and other EU countries to provide up to 200bn euros
to the IMF to help debt-stricken eurozone members
