EU leaders to back diluted budget rules reform-draft

BRUSSELS, Oct 23 (BestGrowthStock) – European Union leaders will
back next week a reform of EU budget rules which introduces new
sanctions for rule-breakers but retains political discretion
over the process, draft conclusions of the EU summit showed.

The reform, which the European Central Bank, the executive
European Commission and several smaller euro zone countries
wanted to be more ambitious by making the sanctions almost
automatic, was watered down by Germany and France.

Changes to the rules, the Stability and Growth Pact, are in
a report that the President of the European Council Herman van
Rompuy, who chaired the task force of ministers preparing them,
will present to EU leaders next week.

“The European Council endorses the report of the task force
on economic governance,” draft conclusions of the leaders
summit, obtained by Reuters, said.

“The European Council calls for a ‘fast track’ approach to
be followed, in order for the Council and the European
Parliament to reach agreement on the Commission’s legislative
proposals by summer 2011 and to ensure the effective
implementation of the new surveillance arrangements as soon as
possible,” the draft conclusions said.

European Central Bank President Jean-Claude Trichet said on
Saturday in South Korea that new rules pushed by France and
Germany were too weak to safeguard the euro zone.

The van Rompuy report says Trichet does not support all the
points in the finance ministers’ agreement.

But EU leaders are likely to praise the reform nonetheless.

“Its implementation will allow to increase fiscal
discipline, broaden economic surveillance, deepen coordination,
and set up robust framework for crisis management and stronger
institutions,” the draft said.

“The result will be a substantial strengthening of the
economic pillar of EMU, enhancing confidence and thus
contributing to sustainable growth, employment and
competitiveness,” it said.
(Reporting by Jan Strupczewski, editing by Alison Williams)

EU leaders to back diluted budget rules reform-draft