Eurozone finance ministers in banking union showdown

EUROZONE finance ministers were squabbling in Brussels over the timetable for a banking union, with some states pushing for faster progress and Germany stressing the need for caution.

The German Finance Minister, Wolfgang Schäuble, argued that an amendment to European Union treaties might be necessary to safeguard the interests of taxpayers in stronger states, while Spain's Prime Minister, Mariano Rajoy, urged the eurozone to press ahead with a collective depositor guarantee.

European leaders had previously agreed to establish a single bank resolution scheme by 2014 to reassure savers alarmed over the safety of their deposits held in weaker states.

The Eurogroup's chairman, Jeroen Dijsselbloem, insisted significant steps towards a banking union were still possible despite the disagreement over timings. He said Germany had raised "understandable questions" about safeguards but added "That shouldn't stop us making progress."

The 17 finance ministers were also expected to discuss member states' fiscal plans ahead of the 22 May European Union summit. Spain and France have won leeway to extend their deficit reduction programmes in light of their recessions. The president of the European Commission, Jose Manuel Barroso, also recently suggested that the pace of cuts and tax rises should be eased.

Eurozone GDP figures for the first quarter of 2013 will be released tomorrow, which are likely to show the single currency bloc is still in recession.