The European Commission wants to beef up the European Stability Mechanism © Getty

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The European Commission is facing resistance from Berlin and other capitals to the ambitious blueprint for eurozone reform that it will lay out on Wednesday.

Brussels wants to beef up the single currency area by turning its sovereign bailout fund, which was created during the financial crisis, into a European Monetary Fund with wider powers. The commission also wants to give more support to countries in economic trouble. It wants EU leaders to start talks about reshaping the eurozone at a summit next week.

Eurozone reform has become a priority for EU leaders who view the next two years as a window to fix shortcomings exposed by the sovereign debt crisis. The idea has important backing from France’s Emmanuel Macron.

However, some capitals have warned that Brussels’ plans are premature, with member states divided over ideas such as more EU help for countries in recession. Officials say the commission’s intervention could backfire, given the political sensitivities in Germany, the Netherlands and other northern member states to the use of taxpayer money to help out weaker economies

Peter Altmaier, Germany’s acting finance minister, said on Tuesday that a number of countries had indicated “that they are not yet convinced as far as additional instruments for dealing with shocks are concerned”.

“I have always seen the role of the commission as very important and constructive,” said Mr Altmaier, a longstanding ally of Angela Merkel, German chancellor. “That does not mean automatically that everything that is tabled is fine.” 

National capitals are split over the need for EU support for recession-hit countries.

France believes that having common eurozone “fiscal capacity” could help to protect investment spending in economies suffering from downturns. A paper circulated by the French finance ministry this month says a common pot could be funded through EU-wide environmental or digital economy taxes, or a share of member states’ income tax receipts.

After years of being consumed by economic firefighting, Brussels is determined to use the continent’s robust recovery to equip itself with more crisis-fighting tools. The commission is also expected to unveil proposals to link EU regional aid more closely to a country’s record on structural economic reforms. Brussels too will sketch out its vision for a permanent eurozone finance minister.

One person briefed on the commission’s thinking said the plans may include options including offering grants or loans with favourable conditions to governments during downturns.

Jean-Claude Juncker, commission president, set out the main elements in a speech in September, where he urged Europe to “act quicker and more decisively” to tackle economic problems. 

The plans to turn the European Stability Mechanism into an EMF will also be controversial, diplomats said. Some national capitals are concerned by Brussels’ suggestion that the powerful institution should be under the direct control of the commission, rather than member states. 

Donald Tusk, the EU Council president who chairs summits of the bloc’s national leaders, has said that next week’s summit should set the stage for more detailed talks next year. He has said leaders should take some firm decisions by June.

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