The Irish Presidency of the European Union has announced a new drive aimed at cutting red tape at EU level.

The Minister for Finance, Mr McCreevy, said the strategy - which will be pursued by the Irish, Dutch, Luxembourg and British EU presidencies in 2004 and 2005 - would "prioritise regulatory reform in a concerted effort to seek more flexible European product, capital and labour markets".

Under the plan, regulations would be subjected to strict tests for their impact on enterprise and competitiveness.

New means of evaluating the administrative burden of European legislation on business would be developed, and alternatives to regulation would be given "due consideration" wherever possible.

The co-sponsors also call on the European Commission to consider nominating a vice-president with explicit responsibility for economic reform to provide leadership on the issue.

The strategy follows the publication by the Government last week of a White Paper on Regulatory Reform, which estimated that unnecessary red tape was costing Irish business up to €600 million a year.

The four-presidency strategy cites an International Monetary Fund finding that improvements in the EU regulatory framework could deliver as much as a 7 per cent increase in gross domestic product and a 3 per cent increase in productivity in the long term.

Mr McCreevy, who was in Brussels yesterday, announced the EU initiative via video-link at an international conference in London.

At the conference, heads of companies, including drugs giant GlaxoSmithKline and spirits group Diageo, had warned that Europe was in danger of losing its jobs to the Far East because of red tape and corporate taxes.

The British Chancellor of the Exchequer, Mr Gordon Brown, told the conference that pro-Europeans should be "resisting the kind of inflexibility being added into directives like the Working Time Directive, the Agency Workers Directive, the Investment Services Directive and the Transparency Directive, as well as insisting on tax competition not tax harmonisation".

In addition to promoting the four-presidency initiative on better regulation, he said, the British government would entrench rather than relax fiscal discipline, simplify planning laws, encourage local pay flexibility, work with the public and private sectors to improve the transport infrastructure, and keep the business tax regime under review.