But the effort is just the latest in a series of efforts over many months to contain the crisis, and it was unclear whether Monday’s action would be enough. Europe’s mounting debts have already led to bankruptcy in Greece and raised the specter of default in several other countries, leading to fears of cascading financial turmoil that could disrupt once booming economies not only across Europe but also in the United States and as far away as Asia.
European leaders are determined to prevent that from happening, said Herman Van Rompuy, the E.U. president. “The treaty is all about more responsibility and more surveillance,” he said.
The effort was undermined, however, by Britain’s reluctance to go along, citing its determination not to relinquish national sovereignty to the treaty’s provisions for automatic sanctions against governments that exceed the new debt limits. In addition, the Czech Republic also declined to sign up, with the government saying it was not sure it could get such a treaty approved in its parliament and courts.
Moreover, a chorus of European officials and economists have questioned the wisdom of the treaty in the first place. The pact was unnecessary, they contend, because European rules — merrily ignored over the years — already forbid excessive government deficits and because the emphasis should be on economic growth rather than fiscal discipline.
Martin Schulz, president of the European Parliament, lectured the gathered presidents and prime ministers on the need to stimulate growth and provide more jobs for the unemployed.
“The aim of the fiscal pact is to win back the confidence of the markets, and we certainly need that,” Shulz, a leader of Germany’s opposition Social Democratic Party, said in a brief speech. “At the same time, however, we must take care not to lose the confidence of ordinary people.”
With that in mind, the European leaders also announced measures designed to foster employment and provide financing for small and medium-sized businesses.
“Governments are undertaking strong efforts to correct budgetary imbalances on a sustainable basis but further efforts are needed to promote growth and employment,” they declared. “There are no quick fixes. Our action must be determined, persistent and broad-based. We must do more to get Europe out of the crisis.”
Van Rompuy also recognized that fiscal discipline is not enough to restore prosperity. “We recognize that financial stability is not enough in itself to get out of the crisis,” he told a news conference. “We must do more, particularly in the areas of growth and employment.”
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