Wednesday, December 14, 2011

Euro: Other Countries May Have Pact Doubts - 14th Dec 2011

Days after Britain used its veto at the European summit, cracks have started to emerge as work begins on drafting the new European pact to save the euro.

26 countries have indicated they would, in principle, sign up to the so-called "fiscal compact" which would tighten up financial regulation in the eurozone.

Of all the EU member states, just the UK walked away from the table at last week's summit in Brussels, which triggered private and public rebuke from officials in Europe and tested the coalition back home.

Now it has emerged that other countries have misgivings about elements which may be included, including tax harmonisation.

Germany and France want to prevent another currency crisis by insisting that countries which use the euro agree to keep their budget deficits or national debts below certain limits.

Those governments which breach the caps could be in line for automatic sanctions from EU institutions, including the European Commission and the European Court of Justice.

But the Financial Times reports that Hungary, which wavered last week before joining the 26, is unhappy about corporation tax levels being set by Brussels, while Sweden has misgivings about the financial transactions tax.

Then there is the possibility that such transference of powers from national governments to central control could trigger a referendum in Ireland. Read More