An Englishman's Castle

And Euro MPs on all political sides condemned the move and vowed to hold their own inquiry.

The rumpus followed a majority vote of the finance ministers not to launch legal action which could have meant huge fines against Paris and Berlin.

Both governments – the most powerful economies in the EU – have run budget deficits above limits permitted by the Stability and Growth Pact, which sets the economic rules for countries in the single currency.

The Commission had urged the other member states to trigger the sanctions the Pact rules demand, arguing that for three years France had not made any effort to comply with the Pact, while German efforts to do so had been “inadequate”.

But a majority of governments agreed to let the guilty pair off the hook in return for promises to work harder to buck up their economic performance in line with the needs of maintaining a stable single currency.

Afterwards Mr Brown justified his support for France and Germany, saying the Pact ought to be flexibly interpreted to take account of economic cycles and not just the bald annual budget deficit figures.

The Commissioner in charge of upholding the Pact, Pedro Solbes, disagreed. He said the decision had no legal basis and did not follow the spirit or letter of the rules.

And some other member states said the result showed there was one law for the powerful EU countries and another for the rest.

Ironically it was the Germans who insisted on setting up the Pact to ensure weaker economies in the eurozone did not endanger single currency stability.

Now the Germans themselves are pleading that the rules they invented are too strict, and the credibility of the Pact– and the single currency itself – is at stake.

Conservative MEP and finance spokesman in the European Parliament Theresa Villiers said:

“Surely this must be the end of the Stability Pact.

“Why should any country comply with it, when the two biggest Euroland economies are flouting it and getting off scot-free?

“This is also another blow to the credibility of the euro. The Pact was billed as an essential way to make the euro work – now it is coming apart at the seams.”

European Liberal Democrat leader Graham Watson MEP said:

“This shabby deal will endanger the ratification of Europe’s new constitution. Citizens may well ask what is the point of agreeing new rules to run the European Union if the big countries will ride roughshod over them when the going gets tough.”

“The European Parliament will want to conduct a thorough post-mortem on this sorry affair. The Commission has attempted to apply (the Pact) but has been overridden by self-interested member states. The onus now will be on the governments which have killed off the Stability Pact to create a workable framework to ensure the future stability of Europe’s currency.”

European Parliament President Pat Cox declared the Pact to be “in the hospital ward but not dead“.

However he justified the decision to go easy on the French and Germans, saying sanctions might have been counter-productive:

“The judgment the finance ministers had to make was whether this is the right moment to take action against one member state emerging from a recession and another which is not firing on all cylinders. I have some doubts – it’s like kicking a dog when it’s down.”

He said the Commission was doing its duty in pushing for sanctions, but “it is for finance ministers to assess the impact of imposing sanctions on the stability culture of the eurozone and the currency itself.”

He called for “quality control” improvements to gear the rules more to national economic cycles adding: “Clearly the pact needs to function better in good times, to give the flexibility needed for a rainy day.”