31 Oct 2010

New EU budget rules agreed

7:06 am on 31 October 2010

European Union leaders have agreed on new budget rules that they hope will protect the euro from a future Greek-style debt crisis.

European Council president Herman van Rompuy announced on Friday that a permanent fund will be set up to provide a safety net for the common European currency.

It will replace a 440 billion euro ($US611 billion) emergency fund when is due to expire in mid-2013.

Proposals to amend the Lisbon treaty will now be drafted by the European Commission and submitted for approval in December.

We are doing everything to ensure that there will never be a repeat of the crisis we have had, said German Chancellor Angela Merkel. One can already say that the euro will be strengthened.

The EU will also be given extra powers to scrutinise national budgets among the bloc's 27 countries.

Separately, the ABC reports the EU's political and administrative bodies asked for an increase of 5.9% in their budgets.

But after pressure by British prime minister David Cameron, European nations agreed to limit the increase to 2.9%.