EU leaders agreed to work towards a fiscal unity in a bid to save the euro currency and to curb contagious debt crisis which had already spread from Greece to its neighboring Ireland, Italy, Portugal and Spain and can spread to other global economies soon if not edged.
European leaders had agreed to forge a new treaty where they will put a severe cap on government expenditure to shore up their currency.
As per the new deal, all the European countries need to submit their fiscal budgets for a central review to the European Commission, the executive body of the EU.
Under the new pact, all the EU nations are required to limit their public deficits by 3% of gross domestic product (GDP). The deal also underlines a cap on their government debt, where their debt should not go beyond 60% of their GDP.
Leaders of Germany and France favored the fiscal unity and said, it was required to regain market confidence to escalate financial crisis.
Earlier 17 out of 27 countries of the euro zone were sharing a common currency as Euro, after the pact, nine more countries are willing to bind themselves to the euro zone after consulting with their national parliaments in a bid to support their allies.
The formal treaty is to be lined by March.