Malta joins ‘Hanseatic League’ resistance to Eurozone budget plan

France and Germany are facing a growing backlash from other governments against their plans for a common euro-zone budget, dealing a blow to the two countries’ ambitions for a big overhaul of the single-currency area.

Malta, the Netherlands, Austria and Polandare 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 reportedly seen by the Financial Times, Dutch finance minister Wopke Hoekstra, has written to Mario 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.

EU diplomats have reportedly said that 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.

Officials said the splits were apparent at a meeting of EU finance ministers in Luxembourg last week.

In his letter, Mr Hoekstra insisted the lack of agreement on the budget be clearly communicated to EU leaders. “There was clearly no consensus on starting to explore options” at the meeting of finance ministers, Mr Hoekstra wrote.

The letter was written by the Dutch finance minister on behalf of Belgium, Luxembourg, Austria, Sweden, Denmark, Finland, Latvia, Lithuania, Estonia, Ireland and Malta.

The list of 12 countries expands a coalition dubbed the ‘ Hanseatic League’ – an initial group of eight smaller fiscally conservative countries, which have insisted on more national responsibility to solve Eurozone economic problems.

Berlin and Paris have insisted that a FrancoGerman deal on reforming monetary union is not a fait accompli for the rest of the Eurozone.

There has been so far no amplification of this issue by the Maltese Finance Ministry.