The proposal would also give Luxembourg, Austria and Belgium a veto right over any agreements reached in the meantime with such third countries like Switzerland. Last week, talks on the directive ran into a brick wall after Luxembourg and Austria insisted that if they have to make amendments to their banking secrecy rules then so should other other tax havens such as Monaco, Lichtenstein and Switzerland.

'Luxembourg's position is not open to change and will not change,' said the principality's Prime Minister Jean-Claude Juncker.

Under the EU proposals, member states and six non-EU countries (America, Switzerland, Liechtenstein, San Marino, Monaco and Andorra) would be expected to share information on interest they pay to individual savers resident in the other relevant countries. For a transitional period of seven years, Belgium, Luxembourg and Austria would apply a withholding tax instead of providing information, at a rate of 15 per cent for the first three years and 20 per cent for the remainder of the period.

The agreement reached at the Feira summit in 2000 stipulated that the text of the directive should be agreed by the end of 2001, with third-party countries brought into line by the end of 2002, with the directive lapsing if this was not achieved. Then the directive's proposals would gradually come into force over a period of seven years.

EU officials, who evidently can't tell a dead horse from a bowl of mussels and chips, were last night said to be 'studying' the new proposals.