The head of Germany's prestigious Ifo economic research institute on Friday slammed European plans to increase economic coordination, calling motions by the EU's executive arm ridiculous.

The Commission wants to monitor unit labor costs and fine a country if it deviates from others, he told Dutch business daily Het Financieele Dagblad in an advance copy of the interview.

This is ridiculous. This is a central planning solution that is alien to a market economy, he added.

France and Germany will present joint proposals on economic policy coordination in the euro zone to an EU summit later in the day, but decisions will only be taken in March along with a strengthening of the currency bloc's rescue fund.

The package will balance German demands for stricter fiscal discipline, backed by sanctions, with French calls for regular euro zone summits to provide economic governance and coordinate growth-oriented policies.

(Writing by Brian Rohan)