Romano Prodi, European Commission president, on Wednesday said Brussels would prepare an initiative for better economic governance to prevent European Union member states from flouting budget rules in the future

The comments came after Germany and France on Tuesday smashed apart the political deal underpinning Europe's single currency less than two years after the launch of euro notes and coins. In a statement issued after emergency Commission talks, Mr Prodi said the EU executive and 15 member states had to remain vigilant and continue to enforce budget discipline. He added that the stability and growth pact would remain central to economic policy in the future but made no mention of legal action after Tuesday's suspension of the budget deficit sanctions mechanism. "The Council (of ministers) cannot use ad-hoc measures to suspend or amend the pact every time it deems that its provisions are too stringent or inopportune," he said. "We need a stronger economic governance for our single market with our single currency. To that end we will prepare an initiative on better economic governance for our single market with our single currency." Earlier, France and Italy had lead calls for the stability pact to be overhauled, with Rome arguing it was dead in its current form. Tuesday's suspension, to protect Germany and France from the humiliation of taking economic instructions from Brussels, was strongly opposed by many smaller EU member states.