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EU leaders make play for new European government

European Union leaders from Germany and France are said to be behind a potentially controversial move which would see the introduction of "an economic government of the EU". In simple terms this would be an authority within the European Union which would oversee the economies of member countries and where "relevant" would have the power to implement fines if states continue with long term high budget deficits. So what would this mean for the UK?

Under the proposed terms it is believed that the UK budget deficit, which is the highest in Europe, would see the UK forfeit around £2 billion year in "structural funds" paid out to deprived areas of Europe. This is £2 billion which the UK government can ill afford to lose at a time when the UK contribution to European Union funds is set to double.

Many believe that we are now seeing "chickens coming home to roost" after Tony Blair signed a last minute agreement with European Union members which will result in closer economic ties in the future. So far the UK government has played down the threat of further meddling by the European Union, citing the possibility these powers will only apply to the 16 member states of the Eurozone who have adopted the euro.

However, there is speculation this evening that the new powers could be rolled out to all EU member states whether they have adopted the euro or not.

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