- Associated Press - Monday, January 30, 2012

BRUSSELS — All European Union countries except Britain and the Czech Republic agreed Monday to sign a new treaty designed to stop overspending in the eurozone and put an end to the bloc’s crippling debt crisis, while EU leaders also pledged to stimulate growth and employment.

The new treaty, known as the fiscal compact, was agreed on at a summit of European leaders in Brussels on Monday. It includes strict debt brakes and makes it more difficult for deficit sinners to escape sanctions. The 17 countries in the eurozone hope the tighter rules will restore confidence in their joint currency and convince investors that all of them will get their debts under control.

“We have a majority of 25 that will now sign up to the fiscal compact,” Swedish Prime Minister Fredrik Reinfeldt said Monday night after the summit of European heads of government in Brussels.

Although the new rules only apply to the 17 euro states, the currency union wants to get broad support from the other EU states, in hopes the accord will eventually be integrated into the main EU treaty.

Britain had said in December it wouldn’t sign the new treaty. Mr. Reinfeldt said the Czech Republic didn’t sign because of parliamentary procedural problems.

“I don’t want to stand in the way of what they think they should do,” British Prime Minister David Cameron said of the other countries. “But this is not an EU treaty because I vetoed that.”

Leaders at the summit also promised to stimulate growth and create jobs across the region, an acknowledgment that their exclusive focus on austerity has had painful side effects.

“Yes we need discipline, but we also need growth,” said Jose Manuel Barroso, the president of the European Commission, the EU’s executive arm.

The leaders pledged to offer more training for young people to ease their transition into the workforce, to deploy unused development funds to create jobs, to reduce barriers to doing business across the EU’s 27 countries and ensure that small businesses have access to credit.

There was, however, no offer of any new financial stimulus.

“We must do more to get Europe out of the crisis,” the leaders said in a statement.

Mr. Barroso said that there is still $107.5 billion in development funds yet to be allocated that small and medium businesses can use for various purposes, including as guarantees to get funding from banks.

He also said the commission will dispatch action teams to the eight countries where youth unemployment is the highest and help fund apprenticeships and young startups.

Europe’s debt crisis has put the Continent and its leaders in an almost impossible situation. While they have to slash their deficits to reassure the financial markets and investors, the crisis has also sent unemployment soaring. Many analysts, politicians and trade unions think that only government spending can restart growth.

Overall, 23 million people are jobless across the EU, 10 percent of the active population. In Spain, unemployment has soared to nearly 23 percent and closed in on 50 percent for those younger than age 25, leaving more than 5 million people out of work as the country slides toward recession.

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