The European Commission has called for sweeping new powers over EU economic policy, including more influence over national budgets. In a submission to the Convention on the Future of Europe, the Commission calls for an enhanced role in enforcing the EU's Broad Economic Policy Guidelines, suggesting that its recommendations to individual countries should be binding unless they are opposed by all 15 EU finance ministers.
In a move that will alarm the Government, the Commission also calls for the abolition of national vetoes on tax and social policies. "It no longer makes sense for unanimity to apply to the fiscal and social dimension of the internal market, particularly as we look ahead to enlargement and the risk of blockages due to the increase in the number of member-states," it said.
Addressing the European Parliament, the Commission President, Mr Romano Prodi, said that the introduction of the euro meant that Europe needed more effective economic coordination. "Economic policy co-ordination must allow us to assess the economic situation jointly at EU level. It must enable us to identify the policy responses and the attendant action. Co-ordination must be continuous, not limited to exceptional circumstances, and it must cover both fiscal and structural aspects," he said.
The Commission's proposals include an upgrading of the Eurogroup - an informal meeting of the 12 euro-zone finance ministers - to full, decision-making status.
At present, the Eurogroup meets before Ecofin - the monthly meeting of all 15 finance ministers. But the Eurogroup is unable to make formal decisions or to take any action without the approval of the three ministers from states outside the euro zone.
Mr Prodi also said that the Commission should represent the euro zone in international bodies such as the International Monetary Fund and the G7. "Co-ordinating economic policy means giving the euro zone the political voice it needs so much.
In this way, the euro will hopefully be represented in a concerted fashion within international organisations," he said.
Ireland's Commissioner, Mr David Byrne, played down the significance of the proposals, suggesting that the proposal to strengthen budget oversight was directed chiefly at large member-states.
He added that the proposals would be the subject of discussion during the Convention, which is due to end next year.
The Government opposes the lifting of national vetoes on tax policy because it fears that tax harmonisation could force Ireland to raise its low level of corporation tax.
The Minister for Finance, Mr McCreevy, is a passionate defender of national governments' sole responsibility for national budgets and is likely to oppose the Commission's proposals. The Commission's submission accepts that budget policy remains a national responsibility but it insists that co-ordination must be strengthened.
"National economic and budgetary policies must respect a Community framework defined by the Treaty and by specific legislation.
As things stand today, two instruments ensure coordination of economic policies, the major economic policy guidelines and the stability and growth pact, which have fulfilled their mission satisfactorily during the first years of economic and monetary union.
