Banks face EU levy to insure against crises

EUROPEAN UNION countries could be forced to impose a levy on their banks to help fund an insurance scheme that would protect against future banking failures.

Michel Barnier, the EU internal market commissioner, will announce the plan – which could raise billions of euros – tomorrow and hopes to pass legislation by the end of next year.

Meanwhile, the EU will next month consider beefing up financial rules to prevent a sovereign debt crisis on the continent from undermining the global financial system.

National leaders will stage a two-day summit on June 17-18 to study plans to bolster the Eurozone’s economic governance and help struggling Eurozone nations to become more competitive.

Countries are keen for new rules to prevent the need for another last-minute fix like the £693bn safety net agreed earlier this month, which Germany approved after chancellor Angela Merkel dropped her long-standing opposition.

European Commission president José Manuel Barroso said nations had to improve economic co-ordination to stabilise and strengthen the euro.

“We must better co-ordinate our economic policy,” he told German daily the Frankfurter Allgemeine Zeitung. “We do not want to make Germany less competitive. Other member states must become more competitive.”

The EU leaders will study a report from EU president Herman van Rompuy, European Central Bank president Jean-Claude Trichet and others, expected to include measures like a mutual review by EU governments of each other’s annual budgets before national parliaments approve them.

The moves are likely to be limited to avoid changing the Lisbon Treaty, which French finance minister Christine Lagarde said would be unpopular in many countries.