The European Commission hopes that a radical shake-up of the rules governing the eurozone will be enough to prevent the single currency area facing further Greek-style debt crises in the future.
Jose Manuel Barroso, the Commission's president, said there was no choice but for these countries to submit to the toughest new rules on economic discipline since the single currency was launched in 1999.
Under proposals submitted yesterday by Mr Barroso, and Olli Rehn, the EU's monetary affairs commissioner, governments of eurozone countries would have to submit their budgets for inspection each year.
While the Commission would not have the power to force an individual member state to rewrite its budget, Mr Rehn said there would be much greater pressure on nations to adopt more realistic assumptions about growth, inflation and interest rates.
In addition, those with higher levels of debt will face particularly tough rules, which effectively force them to adopt budgets that mean borrowing begins to come down. There are also likely to be much stronger disciplinary measures for countries that breach the rules, including the possible suspension of EU voting rights.
"We must show that we are serious about the more fundamental reforms that are needed," said Mr Barroso. "We must now get to the root of the problem."
The proposals are likely to meet some resistance. While members of the single currency zone have given up their powers over monetary policy – in particular the setting of interest rates – to the European Central Bank, moves towards an "economic government" for Europe will be resisted, particularly by nations that would feel vulnerable to the power of Germany, the most financially strong eurozone member.Reuse content