PARIS — While Friday's European summit received a measure of approval from markets for committing to belt-tightening, some businesspeople are worried the accord might further choke growth.
They want to remind their leaders: It doesn't matter if you fix the debt crisis, if you break the economy to do it.
And a deal on debt doesn't address the regulations and bureaucracy that can hold back businesses and entrepreneurs.
While European leaders have repeatedly been criticized for acting too slowly and haltingly to calm financial markets, there is some praise for Friday's deal, which commits governments to balanced-budget laws and tougher scrutiny of their spending from European Union officials. The aim is to convince bond markets that Italy and Spain will be able to pay their debts, so they can borrow affordably and avoid financial collapse. High borrowing costs forced Greece, Ireland and Portugal to take bailouts from other eurozone countries, but Italy and Spain are regarded as too large to bail out — and a default would mean another financial crisis.
Wilbur Ross, who has about $1 billion invested in Europe, praised the deal and said he was surprised that the countries moved this far as quickly as they did.
"Look back a few months ago," said Ross, the chairman and CEO of a private equity firm, WL Ross & Co. "Nobody would have thought there would be any real centralization of fiscal control over individual European countries, yet that's the direction they're moving in."
While many praised the recent agreement among most EU members to pursue closer fiscal ties, some expressed concern that the accord seemed to speak only to the concerns of markets. What about the "real economy," they ask.
Thierry Jeantet, director-general of Euresa, a network of European insurance companies, called it only "a partial agreement" that fails to address "the fundamentals."
"Europe doesn't have any more industrial dynamism," he said. "Europe needs to relaunch its industries, to relaunch its small- and medium-sized businesses."
He advocates an investment fund — not just a rescue fund like Europe's €440 billion fund to support governments — that would pour money into public works and innovation, including encouraging new businesses and investing in technology.
Marina Niforos, managing director of the American Chamber of Commerce in France, echoes the need for more investment.
While individual countries are working to promote innovation — Italy's new budget has some growth-stimulating measures and French President Nicolas Sarkozy has called for more support for small businesses — Niforos said Europe needs a more coordinated effort.
"Austerity that is not coupled on the other side with some kind of a program for job-creation is worrisome," she said. "You need the calm financial markets, you need to restore credibility, but, at the same time, it can sink us into a recession, unless we do have a thought-out plan on the other side to counteract that."
The European Central Bank sharply reduced its projection for 2012 growth on Thursday, to a bare 0.3 percent, down from 1.3 percent only three months ago. Many economists think Europe could be headed into a recession, as fears about the future weigh on business decisions and as growth in emerging economies slows.
Slowing global demand could hurt growth in Europe's export-oriented industrial economy, and the turmoil on financial markets could spill over into the wider economy. Efforts to make banks keep more capital reserves against possible losses from the crisis could cause the institutions to cut back on lending as well — which means it's harder to start or expand a business.
The new treaty sketched out in the early hours of Friday — which 26 of the European Union's 27 countries have said they'll sign up to — calls for more automatic penalties for those who flout the EU's limits on debt and deficits. The governments also agreed to get their permanent bailout fund operating sooner and plan to give as much as 200 billion euros to the International Monetary Fund for rescues.
The agreement's emphasis on cutting back comes as eurozone countries are already slashing spending and raising taxes to close deficits. That cuts the stimulus to the economy from government spending, and the higher taxes leave people with less to spend.
Vivien Schmidt, a professor of international relations at Boston University in Massachusetts, called the agreement "at best, a Band-Aid."
The problem is, what happens to growth if all eurozone governments cut back on spending at once.
"This simply rigidifies the kind of austerity policies that were already in place. And austerity doesn't work when everyone is engaged in austerity, and when economies are going down," she said.
She ticked off the countries that have been hurt by austerity: Greece, Spain, Britain. Only in Italy does she see a flicker of hope because the new premier, Mario Monti, has vowed to reinvest some money saved from cuts back into the economy and poverty-alleviation packages.
"All this is going to do is to push Europe generally further into recession and make life even worse for the southern Europeans," she said.
Hans-Peter Keitel, president Germany's influential BDI industrial business association, praised the deal as a "decisive step forward" to steady the situation. But he also indicated that growth remains key: "Now it must be about returning to growth, through competitiveness and private investment," Keitel said in a statement.
Tony Ca'Zorzi, an Italian entrepreneur who has just started a business in France to create a travel guide app for smartphones, understands the need to satisfy the markets. He said one thing government could do for business is reduce the paperwork necessary to register a business. That way startups would not be forced to seek expensive advice from lawyers and accountants, he said.
"In the U.S., to set up a corporation, I went to see a notary who worked for the bank, it cost me about $700 to set up the company and in two days it was done," he said, describing a previous venture. "Here, it took me two months and not everything is done yet."
That kind of heavy regulation and red-tape makes startups unusual in France, he said, not the image European countries should be projecting if they want to attract growth.
"People look at you with round eyes. 'What? You're starting a business like that? And alone?'"
David McHugh reported from Frankfurt. Associated Press Business Writer Tom Krisher contributed to this report from Detroit.