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EU leaders begin crucial summit in Brussels

09 December 2011 07:36 (UTC +04:00)

Baku - APA-Economics. EU leaders are locked in late night talks at a summit called to tackle the eurozone debt crisis.

The key item on the agenda in Brussels is a Franco-German plan on budgetary discipline, with automatic penalties for eurozone nations that overspend.

Reports say Berlin and Paris failed to secure backing from all 27 EU members to change the bloc’s treaties to proceed with reforms.

Any deal will now likely involve only the 17 eurozone members. World shares have fallen after the European Central Bank ruled out any substantial aid for indebted nations. The US Dow Jones index closed down 1.6%. French and Italian shares ended down 2.5% and 4.3% respectively. Shares on Asian markets opened lower on Friday.

Just before the summit started on Thursday, UK Prime Minister David Cameron, French President Nicolas Sarkozy and German Chancellor Angela Merkel held 45-minute talks, but sources told the BBC there was "no movement" with each side setting out their respective ground.

UK Prime Minister David Cameron has repeatedly warned he will veto anything which harms British interests. In a speech in Marseille earlier on Thursday, President Sarkozy warned that "never has the risk of disintegration been greater" for Europe.

The leaders of the 27 EU nations began the summer with an informal dinner, and later continued their talks behind closed doors. A number of working sessions is also planned on Friday. A set of draft conclusions has been circulating in Brussels and has been seen by the BBC. The draft text proposes a limit on structural deficits of 0.5% of GDP, compared with the present limit of 3% including debt repayments. It also includes a way of increasing the firepower of the eurozone bailout fund above 500bn euros (Â£426bn; $670bn) - a measure which Germany has staunchly opposed. However, the draft conclusions are likely to change substantially before a final text is adopted at the end of the summit.