Emmanuel Macron. Picture: REUTERS
Emmanuel Macron. Picture: REUTERS

Brussels — The EU’s latest budget proposal handed French President Emmanuel Macron a small victory on Wednesday by including a watered down version of the young leader’s idea of a eurozone budget.

The European Commission, the EU’s executive arm, unveiled its massive €1.279-trillion budget for the next seven years with several innovations including cuts on farm spending and funding for countries that fail to respect democratic standards.

Also included was a eurozone stabilisation fund, inspired by Macron, earmarked at a small €30bn, that would help members of the 19-country single currency maintain investment during an economic rough patch.

The commission also included eurozone reform support that would amount to €25bn to encourage reforms by eurozone countries, as well as countries that want to join the euro.

"As a shock-absorbing mechanism, the European Investment Stabilisation Function will complement existing instruments at national and European level," the commission said in a statement. "To be effective, it should kick in automatically in the event of large, asymmetric shocks, subject to clear eligibility criteria and a triggering mechanism determined in advance, in line with the principles of sound financial and macro-economic policy."

The highly technical — and cautious — proposal is a far cry from the ambitions set forth by Macron in a landmark speech in September. Macron urged a major reform drive to re-invigorate the EU at a time of rising populist challenges, with proposals including a common eurozone finance minister and budget.

But key EU player Germany is reluctant to embark on such deep reform that would likely require changing the treaties that govern the union — a treacherous political exercise that would require national referendums. Instead members states are mainly focused on deepening the bloc’s banking union, with hopes to formally launch a European-wide deposit-insurance scheme that would be implemented over the long term.

Those proposals will be discussed by EU leaders at a summit in June.