European leaders push ahead with fiscal treaty

The UK was one of two countries out of 27 that has refused to sign an EU treaty enforcing stricter budget discipline.

Alongside the Czech Republic, the UK refused to agree to the treaty at the European Council meeting last night.

There have been reports that prime minister David Cameron is ready to allow members of the treaty to use the European Commission and Court of Justice. However, the BBC says Work and Pensions Secretary Iain Duncan Smith still believes the PM “vetoed” that possibility when he kept the UK out of the deal in December.

Under the treaty, signatories have agreed to cut budget deficits and reduce national debt as a proportion fo their economic output or face automatic fines of 0.1 per cent of GDP.

The Council has also agreed to bring the establishment of the European Stability Mechanism forward to July – a year earlier than initially planned.