Balls rejects EU's referee bid

INFLUENTIAL think-tank the Centre for Economic Policy Research is calling for an EU referee to help resolve the row over countries breaching their budget deficit rules.

But Ed Balls, economic adviser to the Treasury, warned that the CEPR's plans might not be enough 'to bind in national governments' to a new version of the failed Growth and Stability Pact.

After breaches by France and Germany, the CEPR is arguing for a new 'sustainability council'. Reporting to Brussels, independent experts would take policy submissions from individual governments.

It would not have a veto, but it could recommend policy changes to the European Parliament and to the Ecofin council of finance ministers, which threatened to fine France and Germany for its rule breaches.

CEPR's idea is to allow governments more flexibility to negotiate fiscal policy, but Balls said a stricter framework needed to be agreed in advance.