'Euro-plus pact' divides non-eurozone members

Bulgaria, Romania, Poland, Latvia, Lithuania and Denmark have decided to join the Berlin-inspired project, according to summit conclusions published on Friday.

However, Hungary, the Czech Republic, Sweden and the United Kingdom have decided to opt out from the pact. Unlike the twelve Central and East European countries that joined the EU in 2004-2007, Sweden, the UK and Denmark are under no legal obligation to join the euro zone.

The remaining four countries, including Britain, said they wanted to stay out of the so-called European Stability Mechanism, which will enter into force in June 2013.

"We adopted the Euro-Plus-Pact, which will provide a new quality of economic coordination," EU Council President Herman Van Rompuy told reporters on Thursday evening.

Though not overtly stated, the package is believed to be linked to the EU's permanent rescue mechanism for eurozone nations and those aspiring to adopt the single currency.

However, some diplomats pour cold water on this linkage and simply say the pact makes economic sense for those countries who want to be seen as good pupils or want to adopt the single currency in the future.

The package also recommends rising retirement ages and linking salaries to increasing productivity. It has been left up to individual nations to decide on how and when to achieve these goals.

"The granting of any required financial assistance under the mechanism will be made subject to strict conditionality," reads a summit statement.

EU leaders reached a difficult agreement today yesterday on the funding structure of the euro zone's new permanent bailout facility, which is due to enter into force after 2013, after Germany sought last-minute changes needed to secure political backing in Berlin.

The European Stability Mechanism (ESM) will be the extension of the temporary European Financial Stability Facility (EFSF), currently in place, which has already bailed out Greece and Ireland.

A decision to raise the lending capacity of the short-term EFSF from €250bn to €440bn has been put off until June.

The 'euro plus pact', which originated in Berlin, outlines competitiveness steps that member states should take in order to benefit from the fund – such as raising the retirement age and linking wage levels to productivity.

Berlin insists that participation in the 'euro-plus pact' will be a condition for countries receiving financial support under the ESM as of 2013.