The 17-eurozone leaders have agreed at their summit in Brussels to coordinate economic policies more closely with the aim of improving the competitiveness of their economies, European Council President Herman Van Rompuy said.

In a message via Twitter, Mr Van Rompuy said that there is “agreement in principle on the Pact for the Euro” but that leaders are still discussing other elements of their comprehensive response to the currency union's debt crisis.

EU sources said leaders have agreed to make annual commitments to keep labour costs in check, align retirement ages more closely with life expectancy, and include the EU's limits on public deficits in national law.

The summit is still ongoing.