An EU-wide agreement on lowering average CO2 emissions by 18 per cent between 2012 and 2015 has moved a step closer as Italy has dropped its objections to the plan.

The UK, France, Germany and Italy are now all in agreement that emissions should be dropped to 130 g/km during this period.

Several countries led by Germany argued that the initial plans, by the European Commission, to cut car emissions to 130 g/km by 2012 could damage export earnings and put jobs under threat at manufacturers such as BMW and Mercedes.

Last month the UK, Germany and France agreed the CO2 targets should be phased in between 2012 and 2015.

Italy opposed the plan but has now reached an agreement with Germany that the fines should be a maximum of €15 (£12.8) per gram for cars exceeding the limit.

The fine is set to be €5 for the first excess gram of CO2, €10 for the second and €15 for the third, the system lasting indefinitely.