Germany’s plan for stricter budget discipline has been given backing by 25 fellow EU states at the European Union summit in Brussels.

The deal means the EU member states will join a ‘fiscal treaty’ to enforce budget discipline.

However, two states – the UK and Czech Republic – have refused to sign up. UK Prime Minister David Cameron said his government would act if the treaty threatened UK interests.

The goal is much closer co-ordination of budget policy across the EU to prevent excessive debts accumulating.

Germany – which is the eurozone's biggest lender and most powerful economy - was particularly keen to get a binding treaty adopted to enforce budget rules.

The treaty will empower the European Court of Justice to monitor compliance and impose fines on rule-breakers.

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