EU agrees to weaken Brussels' grip on budget rules

The EU has agreed to weaken Brussels' powers to enforce strict budget rules in the 12-nation eurozone, in a victory for EU heavyweights led by Germany who have repeatedly flouted those rules.
The accord was part of an "historic" constitution which EU leaders trumpeted this weekend as a "win-win" success for the expanding bloc - many of whose new members plan to join the eurozone in the coming years.
Berlin - backed by France, Italy, Greece and Poland - led the push to ease the rules in the teeth of stiff opposition notably from the Netherlands, which expressed widespread concern among smaller EU states that the heavyweights have been let off the hook over ballooning deficits.
Germany and France triggered the effective suspension of budget rules last November, when they refused a Commission proposal for them to be disciplined for breaching a limit on public deficits. If they had followed the letter of the pact, the heavyweight pair could have faced multi-million-euro fines.
Under the Stability and Growth Pact eurozone states must keep their public deficits below three percent of GDP.
Ironically Germany was the key architect of the pact, aiming to traditionally less rigorous states in strict budget line.
But the bigger EU states, who blamed their deficit slippage's on Europe's recent prolonged slowdown, now argue that more leeway should be given to accommodate upswings and slumps in the economic cycle.
"Member states should use periods of economic recovery actively, to consolidate public finances and improve their budgetary positions," says a "Declaration on the Stability and Growth Pact," appended to the constitution.
"The objective is to gradually achieve a budget surplus in good times, which creates the necessary room to accommodate economic downturns and thus contribute to the long term sustainability of public finances," it added.
Crucially, under the treaty agreed Friday night, a Commission proposal to discipline member states could be blocked by a minority - as opposed to a unanimous required by the first draft of the constitution.
This clause aims to prevent smaller countries - who will have generous representation on the Commission - from imposing budget rigour measures on bigger EU member states.
To counterbalance that weakening of the rules, states opposed to the changes - notably the Netherlands, Austria and Finland - secured a clause requiring that the EU act "without undue delay" to recommend corrective action to the member state concerned.