Ministers seek new budget powers

SARAH HELM

Verona

Radical new plans which could open the way for a common European fiscal policy will be discussed today by European finance ministers as part of a new drive to create a single currency.

The plans, which would effectively subject national budget planning to greater joint EU decision-making, are certain to fuel British fears that the single currency would undermine sovereignty. The aim is to make EU countries inside and outside monetary union keep their spending under control, so that the single currency remains stable and keeps its value.

Yves Thibault de Silguy, the EU commissioner for monetary affairs, said the intention of the programme is to make countries meet the economic convergence rules set out in the Maastricht treaty. He spoke as finance ministers gathered for an informal meeting in Verona.

Mr de Silguy outlined a system under which finance ministers might in future have to submit their taxing and public spending plans to their European partners for agreement, should their economies appear to be running into trouble. If the plans were not deemed to be tough enough to keep the national budget in line, the EU council might propose alternatives. In effect, he said the council would become a "council of stability".

"It would be up to the council to evaluate progress," said the commissioner. Mr de Silguy spoke of the need for "peer group pressure" to keep countries on the right track.

One set of stricter new rules would be drawn up for countries seeking to meet the Maastricht rules in order to qualify for monetary union, and another set would be drawn up for those countries already inside EMU.

Rules for economic convergence already exist under the treaty, which also includes provision for sanctions. But Mr de Silguy suggested yesterday that support was now growing for a far tighter programme of "automatic" rules and penalties to encourage all countries to keep to the rules, particularly on budget deficits.

Mr de Silguy spoke of a new "stability programme". The programme, he said, would involve "auto-correctional" budgetary measures. He also floated the idea of a new "multi-lateral surveillance system" for EU economies which might be operated by the European Commission.

Kenneth Clarke, the Chancellor, was already expecting to do battle in Verona over EU moves to encourage Britain to join a new exchange rate mechanism in the run up to monetary union. As news of the new "stability programme" emerged it seemed certain that Mr Clarke will now have to defend another flank, with national powers over fiscal and monetary matters both under assault.

Signs that the EU might be moving towards developing a common fiscal policy have been slowly emerging in recent months. There has been growing concern about how to bring countries into line in the run up to monetary union. But concern has also focused on how to force countries which do join to continue to obey the convergence rules.

In November Theo Waigel, the German finance minister, proposed a "stability pact", threatening fines for countries which join the single currency if they then failed to maintain the Maastricht criteria. The "stability programme" appears to have grown out of this plan.

The Commission appeared wary yesterday of giving too much detail of the plan, which officials acknowledge would be viewed as highly controversial in Britain and some other member states. "We are not drawing a new scheme to tell Britain what taxes to level," said one Commission official. "We are not setting out an economic blue-print for the rest of time."

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
  • 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: Photographer / Floorplanner / Domestic Energy Assessor

£16000 - £25000 per annum: Recruitment Genius: A Photographer/ Floor planner /...

Ashdown Group: Front-End Developer - Surrey - £40,000

£30000 - £40000 per annum: Ashdown Group: Front-End Developer - Guildford/Craw...

Recruitment Genius: Customer Service Assistant

£13500 - £15000 per annum: Recruitment Genius: A Customer Service Assistant is...

Recruitment Genius: Sales Executive - OTE £35,000

£16000 - £35000 per annum: Recruitment Genius: An ambitious and motivated Sale...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence