Eurozone seeks greater powers

The 12 eurozone countries are pushing for the right to take some economic decisions on their own, sidelining the three European Union (EU) members which have not adopted the single currency.

The eurozone governments, led by France and Germany, have asked the European Convention - a body set up to draft a new constitution for the EU - to consider giving them exclusive voting rights on key economic issues.

The move would diminish the influence on European economic policy of the UK, Sweden and Denmark, the three EU nations which remain outside the eurozone.

Although the 12 eurozone finance ministers hold regular informal meetings, economic policy issues are currently decided jointly by all 15 EU finance chiefs.

The proposals, which reinforce claims from British pro-euro campaigners that remaining outside the eurozone would reduce the UK's clout in Brussels, are likely to run into strong resistance from the three non-eurozone countries.

Economic control

The final draft of the new European convention will have to gain the approval of all 15 EU governments at a conference later this year.

The eurozone nations want in particular to be allowed to decide issues affecting the so-called growth and stability pact - a set of rules limiting government borrowing, the Financial Times reported.

EU sources confirmed to BBC News Online that the Convention, chaired by former French President Valery Giscard d'Estaing, was weighing up the proposals.

Analysts said giving eurozone members greater control over economic decision-making might encourage them to coordinate their policy responses to economic shocks, a development which would be positive for the single currency area.

"It could lead to greater flexibility over how they deal with their economies, " Kamal Sharma, currency strategist at Commerzbank, told BBC News Online.

The eurozone's growth prospects have been damaged in recent weeks by a slide in the value of the dollar, making European exports less competitive across the world.