EU finance ministers have agreed
for the need to be tougher on member states’ budgets in the wake of the Greek
And following criticism that Europe
did too little, too late to defend the euro, they pledged to react quicker and
more efficiently in future.
At the first meeting of a new EU
economic taskforce, they agreed new sanctions were needed to enforce rules.
Countries that break deficit limits
could lose EU money or voting rights.
The meeting in Brussels comes at
the end of another week of turmoil on the markets as European countries grapple
with the aftermath of the debt crisis in Greece.
The euro fell to its lowest level
for four years against the dollar in the last few days and share markets have
seen big sell-offs.
What the Euro crisis has underlined
is the difficulty of a single currency in the absence of a closer political
union and more flexible labour markets
With additional concerns about the
level of debt in Spain, Portugal and other countries, the fear has been that
the crisis could harm the wider European economy.
Herman Van Rompuy, European Council
president, said member states had agreed four main objectives:
greater budgetary discipline
to look for ways to reduce the
divergences in competitiveness between member states
to establish an effective economic
crisis management mechanism
to strengthen economic governance
to be able to act quicker and in a more co-ordinated and efficient manner to
deal with any future economic crises
He said the meeting was “only
the start of the process” of putting these policies in place, but that
“there was a strong political will among the European Union finance ministers”.
Finance ministers would now start
work on establishing a comprehensive, formal agreement, he said.
Mr Van Rompuy added that the
taskforce wanted to “draw the lessons” from the current crisis
centred on Greece.
“In the past, corrective
measures were taken too late, the available legal instruments were not used
sufficiently,” he said.
“That’s why we need to act in
a number of ways.”
BBC economics editor Stephanie
Flanders said the ministers had made a start by agreeing that they needed to
agree new rules – the message for the moment was: ‘We’re on the case.’
We will continue to focus on what
we can achieve in the short-term, because it’s really what is guiding us at the
moment is being pragmatic
Christine Lagarde France’s Minister
of Economic Affairs
Chancellor George Osborne said the
UK government was keen “to show that we are serious about living within
“Britain has the largest
budget deficit in the EU and I’m very conscious of that and that’s why in
Britain we’re going to accelerate the reduction of that deficit,” he said.
Christine Lagarde, France’s Minister
of Economic Affairs, said the taskforce had to “focus on what is
She added: “We will continue
to focus on what we can achieve in the short-term, because it’s really what is
guiding us at the moment is being pragmatic.”
The EU taskforce comprises finance
ministers from all 27 member nations of the European Union, European Central
Bank President Jean-Claude Trichet, EU Commissioner for Economic and Financial
Affairs Olli Rehn, Eurogroup President Jean-Claude Juncker, and Mr Van Rompuy.
Its first meeting finished after
the main European share indexes had finished Friday trading.
The main UK, French and German
indexes had lost more than 2% at lunchtime, with London’s FTSE 100 below 5,000
for the first time since November, but all recovered towards the end of the
In London, the FTSE ended down 0.2%
to 5,063 and Germany’s Dax finishing 0.7% lower.
Meanwhile, the Dow
Jones later ended up 1.3%.