The French president has surrendered to the German Chancellor's demands on EU economic governance and her idea of "red cards" for member states that break spending rules set in Brussels. Mr Sarkozy had been determined to create an "economic government" of the 16 eurozone countries with a powerful secretariat to coordinate national budgets, tax and spending.
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President Sarkozy was then bludgeoned into accepting a German ultimatum that euro zone states that persistently breach budget deficit limits should have their voting rights suspended on economic issues, even if that requires changing the EU treaty. Previously, the issue of treaty change has been taboo for Mr Sarkozy who fears a French referendum. "If a treaty change is needed we will propose it," he conceded in Berlin.
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