EU AND THE EURO

FRANCE has been getting a lot of TV news coverage over the past week as trade unions there have taken to the streets and barricades to protest against President Sarkozy's plan to raise the official retirement age from 60 to 62.

They should count themselves fortunate that they do not face the more immediate problems of British trade unionists following yesterday's Comprehensive Spending Review. However the coverage of the street protests took attention away from a rather worrying meeting that took place between President Sarkozy and Chancellor Merkel of Germany on Tuesday.

A European Union summit next week had been expected to approve proposals for a new regime to prevent member states from breaking the eurozone's budget rules as Greece did earlier this year and came close to destroying the euro. Under the proposals the 16 countries using the euro would automatically face heavy fines and other sanctions if they breached the eurozone's strict budget rules. However, the agreement apparently reached at the Sarkozy-Merkel summit favours a case-by-case examination of any breach of the rules rather than automatic sanctions and also proposes a re-opening of part of the Lisbon Treaty to enable the EU to deprive offending countries of voting rights in the EU councils. Most other EU member states will think that any tampering with the Lisbon Treaty so soon after its difficult ratification process should be avoided at all costs.