25 EU leaders signed the new fiscal treaty

Twenty five out of 27 EU leaders have signed a new treaty to enforce budget discipline within the bloc.

The “fiscal compact” aims to prevent the 17 eurozone countries again running up huge debts.

It must now be ratified by individual parliaments and, in the case of the Irish Republic, a referendum.

UK Prime Minister David Cameron, who with the Czechs refused to sign, said his proposals for cutting red tape and promoting business had been ignored.

But the newly re-appointed President of the European Council, Herman Van Rompuy, said British calls to boost the EU economy were being taken seriously and he had sought to re-draft the summit’s conclusions accordingly.

The fiscal compact is what emerged after David Cameron vetoed plans to change the EU treaties to enforce greater budgetary discipline back in December.

German Chancellor Angela Merkel described it as a “great leap”, a first step towards stability and political union.

These new powers may face an early test as both Spain and the Netherlands have admitted they will miss targets for reducing their deficits.

While there has been a change of emphasis at this summit, “from crisis mode to growth mode” in the words of one senior official, it will be difficult to achieve whilst tough spending cuts are being made.

In a speech at the signing ceremony, Herman van Rompuy said: “This stronger self-constraint by each and every one of you as regards debts and deficits is important in itself.

“It helps prevent a repetition of the sovereign debt crisis. It will thus also reinforce trust among member states, which is politically important as well.

“The restoration of confidence in the future of the eurozone will lead to economic growth and jobs. This is our ultimate objective.”