Document: Eurozone eyes 0.5 pct deficit limit

Gabriele Steinhauser, Associated Press
New treaty to save euro splits European Union

German Chancellor Angela Merkel arrives for an EU summit in Brussels on Thursday, Dec. 8, 2011. During a two-day summit German Chancellor Angela Merkel and French President Nicolas Sarkozy will try to build support for their plan for eurozone nations to submit their national budgets to much greater scrutiny. (AP Photo/Geert Vanden Wijngaert)

BRUSSELS (AP) -- Draft conclusions for a crucial summit of European Union leaders say that eurozone states should adopt a debt brake that would limit annual deficits at 0.5 percent of economic output.

The draft statement, which was seen by The Associated Press, says that structural deficits can only exceed a 0.5 percent limit in exceptional circumstances or to counteract a recession.

The limit is stricter than the 3 percent deficit rule currently prescribed by EU law, although the 3 percent also include debt repayments.

EU leaders were still wrangling over the text Thursday evening and final conclusions were not expected before Friday.

The text also sets out a way of increasing the firepower of the eurozone's permanent bailout fund above €500 billion ($670 billion), which is still being opposed by powerful Germany.