EU: European Union leaders have approved a reform of the EU's budget rules but they remained divided last night on a plan to open up the European market in services.
At the start of a two-day summit in Brussels the leaders backed a deal, agreed on Sunday among finance ministers, to loosen the Stability and Growth Pact.
The reform, which has been criticised by the European Central Bank (ECB), will give governments greater leeway in running budget deficits and could make it more difficult to punish countries which break the rules.
Minister for Finance Brian Cowen welcomed the agreement, noting that the new rules could enable the Government to spend up to €1.6 billion more each year on infrastructure projects.
Arriving at the meeting last night, Swedish prime minister Goran Persson backed a French demand for a plan to allow service-providers to operate across borders - known as the Bolkestein Directive - to be withdrawn.
"The Bolkestein proposition will not fly, so we have to start again," he said.
President Jacques Chirac fears that popular opposition to the directive could drive French voters to reject the EU constitution when it is put to them in a referendum in May.
Mr Cowen pointed out that, as a small, open economy, Ireland was dependent on open markets, and he said that the plan to liberalise the market in services would benefit Ireland.
"We are supportive of the directive. We would like to see progress, but we recognise there are concerns in some states, and if more balance is needed in the proposal, then we can work on that," he said.
Mr Cowen would not be drawn on whether he thought the directive should be withdrawn.
"There are clearly going to be amendments to the directive. The present directive, in its present state, does not form the basis on which a consensus decision can be taken," he said.
Danish prime minister Anders Fogh Rasmussen said that the services plan needed major alterations, although he stopped short of calling for its withdrawal.
"Denmark is clearly against the proposals, but we are not alone in our criticism. So I expect several countries will join forces at the summit and demand a number of changes," he said.