* * *

By Bruno Waterfield, in Brussels

A masterplan for “completion of economic and monetary union” has been set out in a confidential document to be discussed by EU leaders at a Brussels summit next week.

In the nine-page paper, seen by The Daily Telegraph, Herman Van Rompuy, the president of the European Council – the monthly summits of EU leaders – charts a series of steps from ongoing financial reforms to overall political union for the eurozone. “The general objective will be to aim for a progressive pooling of economic sovereignty at the European level,” the paper states.

Mr Van Rompuy expects the EU to have agreed an “operational framework” to give the European Central Bank (ECB) the role as single eurozone banking supervisor by March next year, despite continuing splits between France and Germany over the policy.

The EU president then sees a second phase to a full “banking union” with legislative proposals next year for a shared bank bail-out fund and a euro-wide deposit guarantee scheme, proposals that are even more controversial than giving the ECB a supervisory role.

Then, by 2014, the plan requires all eurozone countries to “enter into individual arrangements of a contractual nature with EU institutions on the measures and reforms they commit to undertake and on the means for their implementation”.

With banking union and binding contracts of fiscal policy, the basis will have been laid, according to the plan, for a move to “completion” of the euro which will “imply a change to the treaties” after 2014.

In the final stage, all eurozone countries will essentially surrender fiscal sovereignty with an “increasing degree of common decision-making on national budgets and an enhanced co-ordination of economic policies”.

The step-by-step “road map” will leave Britain isolated and is expected to trigger a fierce British EU referendum debate in the last half of 2014, just months before a general election.