The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union: views in other EU Member States

On 9 December 2011 the European Council discussed the adoption of a “Fiscal Compact” as part of an overall strategy to tackle the sovereign debt crisis in the Eurozone. It was initially supported by 26 of the 27 EU Member States – all the Eurozone States and all the non-Eurozone States except the UK. The UK Prime Minister vetoed the compact as an EU agreement, largely on the grounds that there was no guarantee that it would not affect the UK’s financial services industry.

The 26 decided to adopt an inter-governmental (international) agreement outside the institutional framework of the EU. On 16 December 2011 a draft International Agreement on a Reinforced Economic Union was published, which was the basis for negotiations by an ad hoc working group on a fiscal stability union. On 30 January 2012 the informal European Council agreed to the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (TSCG). The UK did not agree to it and the Czech Republic said it might join at a later stage.

Shortly after the December 2011 European Council, a number of Member States were reported to be concerned about the implications of the agreement. On 28 February 2012 the Irish Taoiseach, Enda Kenny, announced that Ireland would hold a referendum on ratification of the new Treaty. This will be held at the end of May. On 2 March 2012, 25 Member States formally signed the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (TSCG). The target for completing ratification of the Treaty is the end of 2012, although the Treaty can enter into force with 12 ratifications.