EU agrees tougher budget, debt rules, official says

December 9, 2011 05:06

BRUSSELS - European Union leaders agreed a new "fiscal compact" on tighter budget and debt rules for the euro zone in summit talks on Thursday, an EU official said.

"There is a deal between leaders on the new fiscal compact," said the EU official, adding that among the points of agreement was an accord that sanctions on budget rule-breakers would apply automatically unless blocked by a qualified majority -- or three-quarters of member states.

The official said EU leaders were still discussing how to strengthen the future permanent bailout mechanism known as the European Stability Mechanism, and whether it should have a banking license.

It is also not yet been agreed how best to implement the changes. EU President Council Herman Van Rompuy wants all 27 EU states to agree to the rule changes via an adjustment to the EU treaty but Germany and France have said it may only be possible among the 17 euro zone states.

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