A pact among up to 26 European Union countries to enforce stricter budget rules and win back confidence in the euro zone will be finalised by March 2012, European Council President Herman Van Rompuy said on Tuesday.
EU diplomats hope the first draft of a new fiscal treaty for the 17 nations that use the euro and nine other EU countries not in the single currency will be ready next week.
Many of the EU's mechanisms for imposing discipline on profligate debtor countries take effect on Tuesday, but details on how to activate automatic sanctions in the new intergovernmental treaty still need to be decided.
Twenty-six EU member states — all of them apart from Britain — agreed at a summit in Brussels last week that they would pursue deeper fiscal integration as part of efforts to tackle the euro zone debt crisis.
"Early March at the latest, this fiscal compact treaty will be signed," Van Rompuy said in a speech to the European Parliament in Strasbourg.
Several non-euro zone countries, including Sweden, Hungary and the Czech Republic, still need parliamentary approval before they can give their full backing to the move.
Diplomats say this is largely a formality, but euro zone assets have lost ground since the summit, reflecting investor disappointment that leaders failed to agree more immediate steps for tackling the crisis.
The EU's aim is to have the intergovernmental treaty ratified by all countries, apart from Britain, by June.
Van Rompuy said a review of the adequacy of the 500-billion euro ceiling on the euro zone's combined bailout funds will also be completed by March.
The so-called fiscal compact is designed to allow closer surveillance of countries' spending, in an effort to prevent a repeat of the euro zone's debt crisis and which may allow the European Central Bank to step up its purchases of distressed euro zone debt to calm markets.
BRITAIN "FOR DINNER"
Britain refused to agree to changes to the EU's Lisbon treaty to push tougher budget rules in the euro zone after it was unable to win special treatment for London's financial services industry.
European Commission President Jose Manuel Barroso told the parliament, meeting in Strasbourg, that any such concessions would have damaged the EU's single market, which aims to guarantee the free movement of people, trade, goods and services.
"The United Kingdom, in exchange for giving its agreement, asked for a specific protocol on financial services which, as presented, was a risk to the integrity of the internal market. This made compromise impossible," Barroso said.
Worried about being dictated to by a euro zone moving towards common tax systems and common budgetary control, British Prime Minister David Cameron rejected treaty changes to try to maintain influence, but now appears badly isolated.
EU Economic and Monetary Affairs Commissioner Olli Rehn said on Monday he deeply regretted Britain's position, but Cameron was the butt of a string of jokes in the parliament on Tuesday.
"To use a British expression, when you are invited to the table, you are either a guest or you're on the menu," said Guy Verhofstadt, the leader of the alliance of liberals in the parliament, to loud applause.
