The European Commission proposed new economic rules Wednesday that would include fines and loss of EU funding for countries that keep running up deficits and debts.
Olli Rehn, the European commissioner for economic and monetary affairs, said the recession and the near-bankruptcy of Greece exposed the interdependence of national economies and the vulnerability of individual governments.
"It is high time to reinforce our economic union," by coordinating austerity plans across the EU, closing gaps in competitiveness and increasing budgetary discipline, said Rehn.
At a June 17 summit, EU leaders agreed to establish more sanctions to discourage member nations from running up debt, but there is no across-the-board unanimity on the details.
British Prime Minister David Cameron said he would not accept any sanctions for his country because it does not plan to join the euro.
Nor does he want to discuss his budget plans with other EU governments and the European Commission before they go to the national parliament.
German Chancellor Angela Merkel wants to amend the EU treaty to make it possible to deny persistent overspenders' voting rights in the EU. Other countries strenuously oppose that.
Rehn suggested that if a euro zone nation snubs reforms, it should be forced to put an unspecified amount of money in an interest-bearing account.
The funds would be released if that country's budget is back in order.
Additionally, he proposed that the EU be given the power to deny countries subsidies for development and other purposes.
To date, Rehn said, compliance with economic policy goals has been feeble and good times have not been used to make crucial savings.
This has left several nations — notably Greece, Spain and Portugal — with debts exceeding the EU ceiling of 60 percent of gross national income and harmed the credibility of the EU and the euro currency.
Rehn said he expects the EU finance ministers to approve a strict budget timetable next month.
It would require governments to say every April what sort of budget they plan for the next year, enabling the European Commission to make corrections, if needed.
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