Macron Euro-Reform Plan Hits Headwinds at Brussels Meeting

(Bloomberg) -- A Franco-German proposal to create a common budget for the shared currency area ran into trouble at a meeting of finance ministers in Brussels, even as advocates said a breakthrough was still possible before the end of the year.

Some European ministers tasked with assessing the plan on Monday said there still wasn’t enough information to pass judgment, while others said they still had questions on how the blueprint would affect local constituents.

The proposal stems from a broad deal struck between France and Germany in June that aims to strengthen the European project in the face of “existential challenges” on multiple fronts, from migration to the economy. The new euro-area budget, according to plans submitted to the finance ministers by Paris and Berlin, would support investment and foster “convergence and competitiveness” in the region.

“We want clarity about how such an instrument can and should work on top of the existing measures,” Austria’s Hartwig Loeger said on his way into the meeting. Dutch Finance Minister Wopke Hoekstra said that “many questions remain,” adding that “we need to be really convinced that something is in the interest of the Netherlands, in the interest of the Dutch citizens, in the interest of the Dutch taxpayer, and if not we’re out.”

Held Hostage

Beyond the reluctance of Northern European countries, there were also signs the plan could get tangled up in Italy’s confrontation with the European Union over its national budget. Rome had been supportive of the idea, but Deputy Premier Matteo Salvini said Monday that the Franco-German proposal could damage Italy and if it does, he would oppose it, according to remarks cited by newswire Ansa.

European officials have been skeptical about the chances of agreeing to a euro-area budget before the end of the year, given resistance by a group of hawkish nations including the Netherlands, Finland, Ireland and Baltic nations. These countries argue that it is more important to have sound finances and build fiscal buffers at a national level rather than count on euro-area wide tools to weather financial turmoil.

“You need to have the pillars the framework, the political purpose of the tool you are proposing to the other member states,” French Finance Minister Bruno Le Maire said after the meeting. “That’s exactly what we’ve done here today and that’s why to me this is a major breakthrough.”

The blueprint marks the first attempt by France and Germany to flesh out their joint proposal for the euro-area agreed in June, however details fell short of what President Emmanuel Macron has been calling for over the past two years.