New plan to save eurozone

Top European officials have called for countries that use the euro to allow a new watchdog to demand changes to their national budgets, as part of a grand vision to save the currency and the union.

The move comes after Cyprus on Monday became the fifth eurozone country to request financial help from its partners.

The new proposal appears aimed at encouraging Germany to accept closer fiscal integration, such as jointly issued eurobonds, which spread debt risk across the eurozone and would lower the risk of individual states needing a bailout.

If a nation were to flout budget rules the new body “would be in a position to require changes.”

It is not clear how much appetite eurozone governments have for surrendering further control over their budgets to Brussels, although all agreed to abide by a 3 per cent deficit limit when they joined the euro.

“Standing still is not an option,” European Commission President Jose Manuel Barroso, pictured, told reporters yesterday, discussing the plan.

“A big leap forward is now necessary.”