EU may fine Britain pounds 700m

Dublin summit: Monetary union and plans for expansion on course as device explodes at Bordeaux venue for Franco-British talks

European Union leaders have renewed their pledge to sign an ambitious new treaty overhauling the structures and powers of the EU by the middle of next year.

Meeting in Dublin at the weekend, they reaffirmed their commitment to wrapping up a deal on treaty reforms to meet the challenge of expansion eastward, in time for a June 1997 deadline they set in Florence earlier this year.

Restatement of their determination to stick to the timetable will hardly discourage speculation that Franco-German ambitions for political integration are being scaled down, to concentrate minds on preparations for the launch of monetary union in 1999 and to avoid a protracted battle with Britain.

But in public at any rate, John Major's fellow leaders were at pains to insist that the reforms they want entered in the treaty, to be signed in Amsterdam next summer, are anything but cosmetic. Brushing aside the British Prime Minister's latest objections, they moved closer to agreement on incorporating a legal commitment to tackling unemployment in the revised treaty, while the French and German premiers spoke of growing consensus on the need to strengthen the EU's foreign policy and its powers to deal with crime, drugs and terrorism.

Chancellor Helmut Kohl of Germany dismissed as "absurd" suggestions that he was prepared to accept any slackening in the pace of reforms. His remarks last week on a possible "Maastricht 3" negotiation, to come after the current round of treaty talks, were widely interpreted as a signal of his acceptance that the drive to deepen political integration will have to be put on the back burner.

Mr Major listed defence, the common fishing policy, Britain's opt out from the social chapter and measures to tackle unemployment as the areas where Britain could veto progress in the treaty talks. However he confirmed that Britain would continue to play a full part in negotiations about the single currency.

The Germans have won the intellectual battle over the stability pact, originally proposed by Finance Minister, Theo Waigel. Officials are negotiating details of the pact, that will ensure that governments keep a tight rein on their budgets after they join the single currency. The Germans have proposed fines for countries whose deficits exceed the 3 per cent of gross domestic product ceiling set by the Maastricht treaty.

The fines are intended to act as the fiscal equivalent of a nuclear deterrent. The proposed levels are high enough to ensure that members would go all out to stay under the limit.

Although still under debate, there is likely to be a flat rate fine for passing the 3 per cent level, plus a component for every extra percentage point of GDP by which revenues fall short of expenditures, up to a ceiling. The proposed structure is like paying a flat charge for an overdraft, plus a percentage of the amount overdrawn.

For the UK or Italy, the level of fine being discussed is about pounds 700m, plus pounds 700m for every percentage point of GDP by which the government is in the red. For a bigger economy like France it would be approaching pounds 1bn initially plus pounds 1bn for every percentage point of deficit. The figures are equivalent to 0.1 per cent of GDP.

Fines on this scale are likely to be acceptable to potential Emu members as long they are never incurred in practice.

The principle of a stability pact is nevertheless accepted by potential members of the single currency, all of whom recognise the importance of reducing their deficits relative to the size of their economies.

Start your day with The Independent, sign up for daily news emails
News
Ben Little, right, is a Labour supporter while Jonathan Rogers supports the Green Party
general election 2015
News
The 91st Hakone Ekiden Qualifier at Showa Kinen Park, Tokyo, 2014
news
Life and Style
Former helicopter pilot Major Tim Peake will become the first UK astronaut in space for over 20 years
food + drinkNothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
News
Kim Wilde began gardening in the 1990s when she moved to the countryside
peopleThe singer is leading an appeal for the charity Thrive, which uses the therapy of horticulture
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Sport
Alexis Sanchez celebrates scoring a second for Arsenal against Reading
football
Life and Style
health
Voices
An easy-peel potato; Dave Hax has come up with an ingenious method in food preparation
voicesDave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
News
i100
News
Japan's population is projected to fall dramatically in the next 50 years (Wikimedia)
news
Life and Style
Buyers of secondhand cars are searching out shades last seen in cop show ‘The Sweeney’
motoringFlares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Project Implementation Executive

£18000 - £23000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Chiropractic Assistant

£16500 per annum: Recruitment Genius: A Chiropractic Assistant is needed in a ...

Recruitment Genius: Digital Account Executive - Midlands

£18000 - £26000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Web Developer

£28000 - £30000 per annum: Recruitment Genius: This company provides coaching ...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own