Germany sparks alarms with Euro Government call

Calls for the creation of a European Government from German Chancellor Gerhard Schroder were today sending shockwaves through Britain.

The dramatic move is part of a sweeping package of proposed reforms for the European Union endorsed by Mr Schroder, his Social Democratic Party said.

Shadow foreign secretary Francis Maude warned it would "damage the economy and democracy".

He said: "These proposals will lead Europe in the wrong direction. Chancellor Schroder and his allies in Britain and elsewhere are badly out of step."

Mr Maude challenged the Prime Minister to come clean about his intentions over Europe.

"We strongly disagree with Chancellor Gerhard Schroder, but at least he has the courage of his convictions," the Tory MP said.

"Tony Blair doesn’t want to talk about his vision of the EU because he knows how out of touch Labour is on Europe with the mainstream majority of the British people.

"Tony Blair is happy for Britain to become even more run by the EU than it is now. Conservatives believe Britain should be in Europe, but not run by an EU Government."

Downing Street said: "This is the latest contribution to the important debate on the reform of EU institutions.

"The Prime Minister set out his views on institutional reform in his Warsaw speech and that debate will continue in months to come."

Europhile Liberal Democrat foreign affairs spokesman Menzies Campbell warned: "Chancellor Schroder’s proposals are a government too far.

"It would make much more sense for reform of the existing institutions to be Chancellor Schroder’s priority before he embarks on proposals of this kind."

He said: "There is nothing like a majority for a 'European Government' nor would it be in the best interests of the people of the UK for there to be one.

"An effective EU, based on close co-operation between nation states in a treaty framework, will best command public confidence and electoral support."

Mr Schroder’s ideas are set out in a draft policy document for a meeting of Germany’s governing Social Democratic Party.

It shows he is attempting to influence the European policy debate in Germany before seeking re-election next year.

A party spokeswoman confirmed a report in Der Spiegel magazine that the draft suggests turning the EU’s executive Commission into a European Government and giving the European Parliament full power over the 15-nation group’s budget, nearly half of which goes for farm subsidies.

The document calls for the creation of a second chamber of the European parliament that would bring together national government ministers.

At the same time, Schroder said some decision-making powers - for example, on EU aid for infrastructure projects - should be shifted back from the EU bureaucracy to national and regional levels.

Schroder has previously left major European policy initiatives to Foreign Minister Joschka Fischer, who last year called for a "United States of Europe" with a constitution and strong central Government.

Among the major EU countries, that vision is shared by Italy.

Germany’s conservative opposition welcomed Schroder’s proposals, especially the call for removing budgetary powers from the unelected commission and Government ministers.

The draft proposals will be approved by the Social Democrats’ national executive on May 7 and put to a November convention after further discussion inside the party, said the party spokeswoman, Grit Auerswald.