Plan to restore economic stability

Jose Manuel Barroso unveiled plans to restore economic stability across the EU

Plans for Europe-wide supervision of banks and financial bodies will not threaten "day-to-day" national control, the president of the European Commission has insisted.

Jose Manuel Barroso was unveiling detailed plans to restore economic stability across the EU, including the creation of two new pan-Europe supervisory authorities with power to rule over disputes between member states about financial regulation.

Mr Barroso wants the new plan endorsed by EU leaders at a summit next month, warning that it is "now or never" for the restoration of financial confidence and the installation of EU-wide monitoring and alert measures to head off another economic meltdown.

But Prime Minister Gordon Brown is against anything that dilutes the sovereign role of the City of London - not least the creation of an EU body with power to decide financial control disputes between national authorities.

Outline plans were discussed by EU leaders at a summit last March, and the new more detailed document is seen as the prelude to formal Commission proposals in the autumn - if Mr Brown and fellow EU leaders give the green light at their next summit in June. But a UK government statement described the plan merely as "a starting point for further discussions", disappointing Commission officials and signalling possible opposition when EU leaders meet.

The UK statement said: "The global nature of financial services means that problems can arise in one country that affect others. The events of the last 18 months have reinforced the need for much greater co-operation on regulation both internationally and within the EU, to ensure that problems can be dealt with effectively when they occur.

"The Commission's proposals represent a starting point for further discussions. Any reforms we make within the EU need to be workable, practical and consistent with the approach we are taking internationally through the G20."

Earlier President Barroso tried to head off dissent, telling a press conference in Brussels: "We want to move fast, with new system (of EU financial supervision and control) in place in 2010. This is a key part of the economic recovery plan."

He went on: "The fundamental question is simple - financial markets are European and global, not national. Europe must show the political will to tackle future systemic risks before they get out of control."

But he emphasised: "We are not taking away national supervisors' day to day role. It is a partnership between national supervisors and new European supervisory authorities, themselves based on existing committees of member state supervisors."