European leaders approve new fiscal agreement
Participants attend a summit on the integration of foreigners in Germany at the Chancellery on January 31, 2012 in Berlin. Leaders have reached a deal for fiscal unity today, though it doesn't include Britain or the Czech Republic.
Jeremy Hobson: European leaders have agreed on the details of a new treaty that requires countries to balance their budgets and limit their deficits. It's a long-term solution to the continent's debt troubles. But as far as the short-term goes, Europe is still in crisis. This week, analysts are waiting to see if Greece will get another round of bailout cash.
And the treaty does nothing to change that, as Marketplace's Stephen Beard reports from London.
Stephen Beard: The measure imposes German-style fiscal discipline across Europe. The 25 countries signing up will be required by law to balance their budgets. European officials will scrutinize their spending plans. And there'll be hefty fines for countries that let their deficits get out of control.
Steve Barrow is a currency analyst with Standard Bank. He says the new rules are welcome, but they only affect the future. They don't tackle the present danger that some European countries may default on their debt.
Steve Barrow: What they do in the background is try to ensure that this crisis -- when it does finally end -- doesn't come back again.
News of the treaty deal has certainly not reassured investor. Today they 're demanding an unsustainably high return of 21 percent on loans to the Portuguese government. Two countries in the European Union have refused to sign up to the new treaty.
Britain baulked through fear of new taxes on its financial center, and the Czech Republic also rejected the treaty. The Czech president opposes what he sees as an encroachment on his country's national sovereignty.
In London, I'm Stephen Beard for Marketplace.