Leaders of the 17 European nations that use the euro have agreed “in principle” to limit public debt and coordinate their economic policies.
The so-called “pact for the euro” is to be formally adopted at a summit of all 27 European Union members later in the month .
The president of the European Council, Herman Van Rompuy, said though there has been an agreement in principle, other elements of the package are still being discussed.
The agreement is designed to fulfill a German demand that the EU’s weaker economies accept national debt limits in the wake of last year’s bailouts for Greece and Ireland.
In spite of the bailouts, both countries are facing higher interest rates from lenders worried about getting paid back.
Just before the Brussels meeting, Portugal, which also has a weak economy, announced another round of tax increases and spending cuts in an effort to reduce its deficit and improve government finances.
