Bulgaria Supports Eurozone Tax and Budget Pact, UK Out

German Chancellor Angela Merkel (C) and British Prime Minister David Cameron (R) pictured during the family group picture after the European Council meeting, at the EU headquarters in Brussels, Belgium, 09 December 2011. Photo by EPA/BGNES

Bulgaria has supported the new deal, which the majority of European leaders agreed on early Friday in a bid to tighten fiscal discipline in the eurozone and tackle the bloc's debt problems.

Twenty three states - all seventeen eurozone members and six other EU nations, including Bulgaria - agreed to adopt an accord with penalties for breaking deficit rules.

Four countries including Britain however refused to back a new intergovernmental treaty to deepen the integration of national budgets, raising concerns that the EU may turn into a two-tier system, with some countries pursuing deeper integration than others.

"What is on offer isn't in Britain's interests, so I didn't agree to it," Cameron said at a briefing.

"We're doing everything we can to save the euro," President Nicolas Sarkozy of France said at a news conference in Brussels following a marathon summit meeting of EU leaders.

"We would rather have reformed the treaty with 27 members," Sarkozy said. But Prime Minister David Cameron of Britain demanded an "unacceptable" opt out clause related to the financial services sector, Sarkozy said.

"Having seen it was not possible to get unanimity, it was the proper decision to go ahead at least with those ready to commit immediately," Sarkozy told journalists.

"That includes all 17 in the eurozone, plus some who are not in the euro area but want to take part in this fiscal compact," Sarkozy said.

Bulgaria and five more countries have agreed to sign up - Denmark, Latvia, Lithuania, Poland and Romania.

Chancellor Angela Merkel of Germany, who pressed hard for a treaty that would ensure debt limits and central oversight of national budgets, said the decisions made will restore the credibility of the euro zone.

"I have always said the 17 states of the euro zone need to win back credibility," she said. "And I think that this can happen, will happen, with today's decisions."

The main measures agreed to as part of the new agreement, called a "fiscal compact" include:

- a cap of 0.5% of GDP on countries' annual structural deficits

- "automatic consequences" for countries whose public deficit exceeds 3% of GDP

- the tighter rules to be enshrined in countries' constitutions

- European Stability Mechanism (ESM) to be accelerated and brought into force in July 2012

- adequacy of EUR 500 B limit for ESM to be reassessed

- Eurozone and other EU countries to provide up to EUR 200 B to the IMF to help debt-stricken eurozone members

Hungary also said it will not play a part in a new inter-governmental agreement, while Sweden and the Czech Republic will consult their parliaments before making a decision.

After the agreement on the treaty was reached early Friday morning in Europe, stock markets gradually rose over the course of the trading session.

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