EU hands Macron modest eurozone budget bid

Brussels (AFP) –


The EU on Thursday unveiled a modest plan to answer French President Emmanuel Macron's ambitious call for a eurozone-wide budget.

The proposal is nevertheless likely to face strong reservations from Germany and richer EU countries such as the Netherlands, which are opposed to the redistribution of national wealth to their poorer eurozone partners.

But Macron has made the idea of a crisis-fighting budget for the 19-member single currency bloc a signature part of his plans to jump-start the EU after the debt crisis and the shock of Brexit.

"This is an embryo of a eurozone budget, the seed is planted," said EU Economic Affairs Commissioner Pierre Moscovici at a news briefing in Brussels.

In the plan, the European Commission unveiled two ideas that would use the EU budget to unlock special funds to members of the eurozone or countries about to join the currency.

Under the proposal -- which needs the backing from all EU states minus Britain -- 25 billion euros ($30 billion) over a period of seven years could be made available to countries that have embarked on tough reforms ordered by Brussels.

The second part would create a special lending capacity of 30 billion euros in the case of "asymmetric shocks" that create sudden spikes in unemployment.

These could be one-off problems such as a natural disaster or a localised crisis, with the fallout of Brexit on Ireland often cited as an example.

The proposals are tiny compared to the eurozone's existing bailout fund, the European Stability Mechanism, which is armed with lending capacity of 500 billion euros.

The ESM, which is governed by eurozone finance ministers, only lends under strict conditions and is currently working towards completing Greece's third bailout programme by this summer.

"This proposal is a step in the right direction, but the euro area needs a convergence and stabilisation budget," the French finance ministry said in a terse statement.