Tougher EU debt penalties

Brussels - European Union finance ministers have backed tougher sanctions to prevent them running up too much debt, in the hope of winning back market confidence and getting a handle on the crisis threatening the euro.

EU president Herman Van Rompuy said the talks last Friday showed that 'it was very clear that there was a broad consensus on the principle of having sanctions'.

Current limits on debt and deficits are backed up on paper by heavy fines, which have never been imposed - effectively allowing Greece and others to ignore them and build up massive debt

Mr Van Rompuy gave no details of new sanctions because officials from the EU's 27 governments, the European Central Bank and the European Commission are only starting work on changes to widely flouted budget rules. Leaders are due to decide on long-term reforms at an October summit.

Germany, which is providing the largest chunk of bailout funds, is keen on harsher punishments. These include the stripping of voting rights or development funds, or ejection from the euro currency.

Mr Van Rompuy indicated that he was opposed to the changes Germany has called for.