January 31, 2012
BRUSSELS — European leaders adopted a groundbreaking new treaty Monday that binds them to imposing caps on deficits and government debts to combat the painful financial crisis that has sabotaged prosperity across the continent and left it slipping toward recession.
The treaty, endorsed by 25 of the 27 European Union governments, was intended as a gesture to show skeptical financial markets that European governments are at last committed to gaining control over lax borrowing habits that over the last four decades have helped create dangerously high debts.
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.
This article was posted: Tuesday, January 31, 2012 at 10:02 am