Prodi plan excludes Britain

Britain faces being sidelined in key European Union economic decision-making under plans put forward today by Romano Prodi.

The European Commission president wants to hand over crucial powers to an informal group of finance ministers from the 12 countries which have signed up to the euro.

The move is certain to be resisted by Britain because it would give the EU greater say over British levels of taxation and spending.

Under present rules, Chancellor Gordon Brown can influence big decisions because they are taken at regular Ecofin meetings of all 15 member states' finance ministers.

Mr Prodi's blueprint would see Ecofin rubber-stamping decisions taken by the smaller body, from which the UK is excluded.

The Commission's proposals could also strip Britain of its separate place at the table in big international forums such as the G8 and International Monetary Fund, where a single European Union figure would represent all member states.

Any evidence that the Commission is seeking to grab more power for itself threatens to damage Tony Blair's attempts to swing British public opinion in favour of the EU.

It could harm the Government's chances of persuading Britons to vote in a referendum to join the euro.

The proposed rule changes form part of a 25-page submission by the Commission to an inquiry into the way Europe is governed, which is being chaired by former French president Valery Giscard d'Estaing.

Also on the table are moves to give the EU greater say over members states' foreign policies. The document was being unveiled to Euro-MPs today.

Before the changes could take effect, they would have to be agreed at the EU's next inter-governmental conference (IGC).

A Treasury spokesman said: "The Commission usually bids high before each IGC. The treaty gives it only a limited role in economic policy coordination.

"The question is whether there is the consensus that would be needed to change these arrangements. We need convincing that there is."

Government sources pointed out that other countries besides Britain will oppose the proposals.

M Giscard d'Estaing's convention, a 100-strong gathering of national and European politicians, Commission officials and business leaders, is preparing plans to be put to governments in 2004 on the future shape of the European Union. It has no legal powers and the Commission's proposals are just a small part of discussions which will last for months.