It took five hours of intense negotiations last night in Brussels before EU leaders agreed on the union’s financial treaty, the fiscal compact.
The treaty is designed to force EU member states to implement debt brakes and cut back on excessive public spending. While it is only essentially compulsory for the 17 euro countries all 27 EU states may join it.
Only the UK and the Czech Republic have announced they will sit out of the fiscal compact.
PM Helle Thorning-Schmidt has not hidden her support for the treaty and she currently has the support of five parties Â– including the opposition Konservative and Venstre parties Â– to proceed, but only if it does not conflict with DenmarkÂ’s euro opt-out.
Signing the fiscal compact will force Denmark to adopt stricter budget rules preventing the government from operating a structural deficit of more than 0.5 percent of GDP. If Denmark does exceed the limit, it can be fined if it does not subsequently implement a tough debt brake.
The major difference between euro and non-euro countries is where the fines are paid Â– euro countries will be paying into the Eurozone rescue fund, the EFSF, while non-euro countries will pay into the EUÂ’s common budget.
Several Danish political parties believe the treaty contravenes the constitution and will require a referendum to be implemented. The Justice Ministry is now examining the fiscal compact to see if this is the case.
The eight non-euro countries that did agree to the pact will also be assured a place at some of the eurogroup meetings Â– meetings of the 17 eurozone finance ministers Â– as a compromise for signing up.
EU leaders also decided at the meeting to adopt measures that can boost growth and tackle youth unemployment across Europe. This development was warmly received by the European affairs minister, Nicolai Wammen.
Â“It has sent a concrete signal about creating jobs in Europe and increasing growth,Â” Wammen wrote on his Facebook page.
Â“I think the fiscal compact that was agreed yesterday is sensible for Denmark because it creates security about the European and Danish economies. Seventy percent of Danish exports are to EU countries and almost 500,000 workplaces are dependent on precisely on these exports. Therefore the deal is of great importance for Danish businesses and workers.Â”