Appointees criticised

Briton Catherine Ashton will start work immediately as high representative for foreign affairs, while Herman Van Rompuy, the Belgian prime minister, takes over as president of the Council of EU leaders on January 1.

The EU has struggled to assert itself as emerging powers such as China become more influential following the global economic crisis. The impact of the changes under the treaty will not be felt overnight.  

Although the union is an important political and trading bloc representing nearly 500 million people, its leaders have often looked divided during the eight years it took to negotiate and ratify the treaty.

They reached agreement on the appointment of Ashton and Van Rompuy only at the last minute last month. Critics say the choice of two leaders, who are little known even in the EU, raises questions about how the EU will raise its global profile.

"I think it is good that the rest of the world reminds us that they would welcome some people with ideas and some drive," said Daniel Gros of the Centre for European Policy Studies.

"Unfortunately it is not a widely felt view in the EU." 

New rules

The treaty changes the rules on how decisions are reached by the EU because decision-making has become unwieldy since the accession of 10 countries, mostly from eastern and central Europe, in 2004 and two more in 2007.

The agreement removes national vetoes in a number of areas, including emergency aid and tackling climate change, but unanimity will still be required in defence, social security, tax and foreign policy.

"I'm delighted that we now have the right institutions to act and a period of stability, so that we can focus all our energy on delivering what matters to our citizens," said Jose Manuel Barroso, the European Commission president.

The commission said the EU would now focus on "managing a smooth exit from the economic and financial crisis," which opinion polls suggest is the main concern of voters, many of whom regard the bloc as out of touch with ordinary people.

Central to economic recovery will be reducing member states' bloated budget deficits and deciding when to stop emergency financial measures that were used to prop up the economy. 

Gross domestic product is expected to rise by only about 0.7 per cent in 2010 and official data shows unemployment is expected to rise above 10 per cent in the 27-nation bloc.