Reuters Strasbourg, France

A pact among up to 26 EU countries to enforce stricter budget rules and win back confidence in the euro zone would be finalised by March, European Council president Herman van Rompuy said yesterday.

EU diplomats hope the first draft of a new fiscal treaty for the 17 nations that use the euro and nine other EU countries not in the single currency will be ready next week.

Many of the EU’s mechanisms for imposing discipline on profligate debtor countries took effect yesterday, but details on how to activate automatic sanctions in the new intergovernmental treaty still need to be decided.

Twenty-six of the 27 EU member states – all apart from Britain – agreed at a summit in Brussels last week that they would pursue deeper fiscal integration as part of efforts to tackle the euro zone debt crisis.

“Early March at the latest, this fiscal compact treaty will be signed,” Van Rompuy said in a speech to the European Parliament in Strasbourg.

Several non-euro zone countries, including Sweden, Hungary and the Czech Republic, still need parliamentary approval before they can give their full backing to the move.

Diplomats say this is largely a formality, but euro zone assets have lost ground since the summit, reflecting investor disappointment that leaders failed to agree to more immediate steps for tackling the crisis.

The EU’s aim is to have the treaty ratified by all countries, apart from Britain, by June.

Van Rompuy said a review of the adequacy of the e500 billion (R5.4 trillion) ceiling on the euro zone’s combined bailout funds would also be completed by March.

The so-called fiscal compact aims to allow closer surveillance of countries’ spending, in an effort to prevent a repeat of the euro zone’s debt crisis and which may allow the European Central Bank to step up its purchases of distressed euro zone debt to calm markets.

Britain refused to agree to the changes after it failed to win special treatment for London’s financial services industry.

European Commission president José Manuel Barroso said that any such concession would damage the EU’s single market, which aims to guarantee the free movement of people, trade, goods and services.

“The UK, in exchange for giving its agreement, asked for a specific protocol on financial services which, as presented, was a risk to the integrity of the internal market,” he said.

Worried about being dictated to by a euro zone moving towards common tax systems and budgetary control, UK Prime Minister David Cameron rejected treaty changes to try to maintain influence, but now appears badly isolated.

EU economic and monetary affairs commissioner Olli Rehn said on Monday that he deeply regretted Britain’s position, but Cameron was the butt of a string of jokes yesterday.

“To use a British expression, when you are invited to the table, you are either a guest or you’re on the menu,” said Guy Verhofstadt, the leader of the alliance of liberals in the parliament, to applause. – Reuters