Perhaps for the first time since the financial and economic crises rocked Europe (and the world) to the core, a degree of acceptance, remorse, deciciveness and concrete action has been seen at a European Council level.

The summit, held in Brussels on Thursday and Friday threatened to be grind to a halt as a result German insistence to renegotiate the Lisbon Treaty in terms of creating a ‘sin-bin’ which would be used to penalize member states for not sticking to Europe’s soon-to-be enacted policy of fiscal consolidation.

In the end, differences were put aside and there has been a political gentleman’s agreement for all states to begin the hard task of reducing deficits to 3% of GDP and sovereign debts to below 60% of GDP. The new rules stipulate that there must be a majority vote to declare that a country is in violation of these terms and this could lead to a fine equivalent to 0.2% of GDP – in Malta’s case, some EUR10m.

In actual fact, it is the other way round, countries have to vote ‘against’ sanctions being taken – the aim of which is to reduce the power of political lobbying. Germany, on the other hand, has agreed to leave the ‘sin-bin’ idea on the backburner. The proposal would mean that a country’s voting rights could be struck off if they do not adhere to the fiscal benchmarks. Having said that, the new rules also stipulate that if a country’s economic figures (now monitored by the European Commission) show that a good downward trend has been established, then there will be no need for sanctions.

In effect, political agreement was reached and the European Union’s Task Force, led by President Hermann Van Rompuy, will now analyse the previous text and update it according to what was agreed last week. The next council will convene in December.

The PM spoke at the PN General Council on Sunday and explained this to the party grassroots. Many other countries have deficits of 12,20 and 30-odd%. Malta’s stands at 3.8% and the aim is to reduce it by 1 % in 2011, and a subsequent 0.5% in 2012 and 2013. That means that we may start to dream of a balanced budget by about 2015 – dependant on our performance.

Once the books are balanced, Malta can begin to tackle the structural debt. It currently stands at about 60% and will continue to grow to about 67% by the time the books are balanced. We must do it. One need only to look at European Summits and how they are conducted to realise that respect comes with fiscal adherence. As we mentioned in a previous leading article, one only needs to look at the respect given to Luxembourg – both within the EU and the European Commission and this is simply because of the fact that they have always had solid finances. If Malta can grasp this chance to be one of the first countries to do so, and to remain in conformity – our stock would grow tremendously.

It seems that Europe has finally shaken off the paralysis that gripped the bloc in the crisis, but it is going to be a long road ahead. Malta has already been touted with Germany as being only the two EU members to record growth which was beyond projections. Now is the time to pay off our debts and get out house in order – all of us.