Dutch Prime Minister Mark Rutte buried the eurozone budget on Friday even as French President Emmanuel Macron insisted it is alive and kicking.

The leaders' contrasting remarks highlighted deep and continuing disagreements over Macron's plan for a special budget for members of the single currency area. The French president's blueprint is part of a broader vision of European integration that has met strong resistance from some other EU members.

At a summit on Friday, EU leaders signed off on a plan for a Budgetary Instrument for Convergence and Competitiveness (BICC) that falls a long way short of Macron's goals. It also leaves many key details — such as the size of the new fund and its sources of financing — unresolved.

Most notably, as things stand, the new pot of cash will not have a "stabilization function" that would help eurozone countries in economic trouble, for example by providing loans.

Rutte told reporters at the end of Friday’s summit in Brussels that “2018 was the year when we debated heavily between France and the Netherlands on this idea of stabilization and a eurozone budget.”

For France, providing stability should be a key function of the budget.

He added: “Both are out of the window. Stabilization is gone. The eurozone budget is gone.”

Eurozone finance ministers last week agreed a basic blueprint for the BICC, with a focus on integrating economies and increasing competitiveness within the single currency club.

France’s finance minister, Bruno Le Maire, at the time hailed the agreement as a “mini revolution” as part of a French “mission impossible” of achieving a budget that would “grow over time.”

So far, it's more "mini" and less "revolution" — thanks to a sustained effort by the Netherlands and a group of Northern European countries, sometimes known as the New Hanseatic League, to block the French vision.

But Macron played up what has been achieved so far. He told reporters at the summit that his proposal had been widely regarded as unrealistic when he floated it in a speech at at the Sorbonne University in Paris two years ago. Since then, he noted, France and Germany have sketched out a common vision and eurozone leaders have signed on to elements of his plan.

"Many things have advanced," Macron said, before acknowledging: “We’re not there yet — we still have steps to take."

Sorbonne speech

In his Sorbonne speech, Macron set out a plan for a eurozone budget that would be overseen by its own finance minister, have its own sources of revenue and could “provide stability in the face of economic shocks, as no state can tackle an economic crisis alone.”

For France, providing stability should be a key function of the budget. Supporters of the idea have suggested such a budget could help Ireland, for example, if it was hit hard by a no-deal Brexit.

But the instrument currently envisaged would not have this function, would not have its own finance minister or dedicated sources of revenue and would exist inside the EU's existing long-term budget, the Multiannual Financial Framework (MFF).

Rutte and others have warned that using such a budget to stabilize economies is a recipe for rewarding governments that pursue reckless fiscal policies.

Countries “need to take care of their own state budget, making sure that the deficit is under control and that state debt is under control,” Rutte said. “That’s crucial because the best way to stabilize your economy in times of a crisis is to be able to borrow money without getting your economy into trouble.”

The biggest question of all is how the BICC will develop over the long term.

Anything more could dissuade “countries that have not done their homework” from sorting out their own coffers.

“I’m not going to, through Europe, spend money on that,” he said. “That’s simply not acceptable.”

Negotiating table

Mário Centeno, the president of the Eurogroup of finance ministers, presented last week's blueprint to leaders on Friday morning after six months of talks in monthly Eurogroup gatherings.

He called on them to show “ambition” and “leadership” to take the budget forward with clear guidance on how to proceed further.

Leaders promptly put the ball back into Centeno's court, releasing a statement that requested the finance ministers go back to the negotiating table to add more substance to the BICC plan.

The BICC is currently designed to help eurozone countries improve their public administration and help attract corporate investment.

Among the key questions still to be resolved is the amount of cash that will be allocated to the new fund. Several eurozone diplomats have suggested BICC could disburse between €17 billion and €20 billion to eurozone capitals over seven years. That's a far cry from Macron's goal of a budget equivalent to several percentage points of eurozone GDP.

Governments will decide on the BICC's size as part of ongoing talks over the EU's next long-term budget, to run from 2021 to 2027. Finance ministries will also have to decide whether countries can help top it up with the likes of a financial transaction tax.

Governance also remains a question.

The European Commission is set to lock the new budget into its European Semester, a process that tries to coordinate fiscal policies across the bloc. But how the actual spending programs will be agreed is still unclear, as is the percentage of funds that individual countries can apply for.

The biggest question of all is how the BICC will develop over the long term — whether it remains modest, in line with Rutte's wishes, or grows into a true eurozone budget, as imagined by Macron.

“There are still some parts of the instrument that need to be detailed,” Centeno told reporters ahead of the summit. “It’s true that some see it as an embryo of a true eurozone budget.”