Cameron to support plans for eurozone super-state

David Cameron is preparing to back the first detailed roadmap to a European “super-state” with centralised powers over tax and public spending.

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The Prime Minister will travel to Brussels for a summit with European leaders on Thursday to discuss a proposed two-year timetable to a political union in which countries lose the right to set their own budgets.

But he has postponed a landmark speech setting out how he will give voters a say over the future of Britain’s relationship with the EU until next year.

Mr Cameron was said to have been considering announcing his policy on a possible referendum next week.

Last week, Boris Johnson, the Mayor of London and a potential leadership rival to the Prime Minister, warned that the coalition’s policies of encouraging ever closer economic links between eurozone countries was “morally wrong”.

Mr Johnson demanded that the Prime Minister call a referendum on whether Britain should remain part of a new “pared down” European Union focused on trade through the single market.

However, the Prime Minister is understood to be prepared to defy Mr Johnson and indicate that he will not obstruct moves towards political and economic union among the 17 countries in the euro.

Herman Van Rompuy, the president of the European Council, who will chair the EU summit, will table the plan for “complete economic and monetary union”.

Over the next 12 months, the plan would see eurozone banks become regulated by the European Central Bank, rather than financial watchdogs in individual countries.

After 2014, the roadmap would culminate in the establishment of a eurozone budget and “enhanced coordination” of tax and employment policies across the 17 member states in the single currency.

EU officials now believe that a new Treaty to establish the new framework is “inevitable”.

However, eurosceptics, including Mr Johnson, are likely to object to the plans which will see eurozone countries surrendering economic sovereignty to the EU.

The masterplan is also likely to trigger a fierce debate in Britain over a referendum on the UK’s continuing membership of the EU in the last half of 2014, months before a general election in the summer of 2015. The coalition has promised to hold a referendum if a new EU Treaty cedes further power from the UK to Brussels.

Other European proposals include plans for a new banking regulator for the 17 countries in the eurozone.

Mr Cameron understood to be determined to ensure that any new rules do not undermine the operation of the European single market, which benefits the British economy.

Mr Van Rompuy said: “The main purpose of this meeting will be for us to discuss a specific and timebound roadmap for the completion of the Economic and Monetary Union (EMU).

“It is indeed crucial that, in order to boost confidence in the long term viability of the EMU, we set out the milestones that will ensure we close the gaps in the EMU architecture which were revealed by the crisis.”