European Commission president Mr Romano Prodi said today the European Union needed new common rules on how to handle budgets and tax policies in boom times.
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Mr Romano Prodi
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Addressing a news conference ahead of Friday's Barcelona summit, Mr Prodi said the EU's stability and growth pact had a short-term horizon to prevent member states running excessive deficits, but was not enough to manage their growing economic interdependence and avoid repeating the mistakes of the 1980s.
"Experience has shown that mistaken policies are usually conducted in good times, when the economy is expanding. We find that at that time, member states fritter away the leeway that they need to cater for leaner times when there is either reduced growth or actually recession," he said.
"Secondly, we could also think in terms of common rules for tax policy, again when the economy is booming and when tax revenues are higher than expected," Mr Prodi added.
The head of the EU executive has called repeatedly for a code of conduct for economic and budget policy in recent months but diplomats say several member states, including Britain and Sweden, regard the idea as a non-starter.