The Treaty In Brief
- Article 1 states that the Treaty aims to strengthen economic and monetary union by adopting rules to improve budgetary discipline and to strengthen coordination of economic policies.
- Article 2 makes it clear that the Treaty must comply with EU Treaties.
- Article 3 requires a Government to run a balanced budget or one that creates a surplus (ie, it generally cannot spend more than it raises in taxes). It sets out in technical terms how the rule is to be applied, and requires that it be included by each country in its national law.
- Article 4 states that a country must not have a debt bigger than 60% of what it produces in a year (its GDP). If it does, it must reduce its debt by one-twentieth of the excess each year. This is an existing EU rule.
- Article 5 states that a country with an excessive deficit (too large a gap between its income and spending) will have to put in place a programme of economic reform.
- Article 6 states that countries will share information on when they plan to issue debt (to sell bonds to raise money).
- Article 7 makes it easier to hold countries that break EU economic rules to account, as those bound by the Treaty agree to act together to support the EU Commission in this.
- Article 8 says that it will be possible for a country to be taken to the European Court of Justice if it doesn’t apply the rule of Article 3 in its national laws properly. If the Court finds against it, and it does not comply, the country might be fined.
- Article 9 contains an agreement to work together to ensure the proper functioning of the euro so as to promote employment and economic stability.
- Article 10 states that the countries participating are ready to work together in groups on particular issues where not everyone in the EU wants to move forward together (enhanced cooperation). This would be done case-by-case and within existing EU rules.
- Article 11 contains an agreement to share plans for major economic policy reforms with each other.
- Articles 12 and 13 contain arrangements to improve the working of the euro area, including an agreement for Prime Ministers to meet at least twice a year.
- Article 14 says that each country will ratify the Treaty according to its own requirements – in Ireland’s case a referendum. It will come into force once 12 euro area countries have ratified it. The target date for ratification is 1 January 2013.
- Article 15 provides that other EU countries can join in the future.
- Article 16 provides that steps will be taken to include this new Treaty in the EU Treaties no more than 5 years from when it comes into force.
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