France’s and Germany’s proposal for common eurozone budget faces resistance from other countries

The Financial Times reports that France and Germany are facing a growing backlash from other Eurozone governments against their plans for a common eurozone budget, dealing a blow to the two countries’ ambitions for a big overhaul of the single currency area.

The Netherlands, Austria and Finland are among 12 governments questioning the need for any joint eurozone “fiscal capacity”, challenging a central tenet of French President Emmanuel Macron’s vision for the eurozone that he has successfully pressed Berlin to endorse.

According to a letter seen by the Financial Times, Dutch finance minister Wopke Hoekstra has written to Mário Centeno, the president of the eurogroup, to underline that there is “wide divergence” on the need for any budget, with a number of countries concerned about “moral hazard risks” and questions of “fiscal neutrality” posed by the plan. Mr Macron and Germany’s Angela Merkel, the leaders deemed essential to any agreement over European reforms, tried to restart their close collaboration this week ahead of a wider summit of EU leaders.

They agreed that a new common pot of eurozone money could be funded by a mixture of national contributions and new EU levies, such as a financial transactions tax. Their agreement forms part of a broader deal between Paris and Berlin on how to strengthen the currency bloc. But EU diplomats said Ms Merkel’s concession to Mr Macron had emboldened other countries to resist the blueprint, out of concern that it would leave their taxpayers too exposed to problems in crisis-hit member states.