EU member states that do not stick to strict financial targets, including deficit and debt reduction, will have to bear financial consequences under proposed rules that would allow suspension of EU funding to “disobedient” member states.

The controversial plan, tabled by the European Commission last week, forms part of a ­legislative package intended to streamline and make more efficient use of billions of euros in cohesion and regional funds, to be disbursed from the next seven-year EU budget 2014 to 2020.

The proposals come days after the EU approved rules for more effective economic governance among member states, including more coordination of national budgets and the possible imposition of fines on those which ignore EU recommendations.

The tabled draft legislation will form part of ongoing negotiations on the next EU budget, which are expected to be long and tough as member states normally haggle up to the last minute on how much they will receive and contribute to the EU’s coffers. These negotiations are expected to take until the end of next year.

Under current rules, it is practically impossible for the EU to impose sanctions on rogue member states. However, on the insistence of France and Germany, which are both asking for stricter fiscal policy, the Commission is proposing a suspension mechanism.

A Commission spokesman played down the issue saying funds will only be suspended “as a last resort” and after various chances given to member states to come in line.

However, many countries are already voicing their opposition to the proposals arguing that suspension of funds would only lead to further economic trouble for the country concerned.

Malta, which is still hoping to qualify for the highest amount of funds possible, has not yet taken a position on these proposals.

Only member states with a GDP of under 75 per cent of the EU’s average are eligible to get the most funds. During the 2007-2013 budget, Malta managed to get into this category, however, it is not yet clear whether this will be possible for the 2014-2020 budget.

Apart from the possibility of sanctions, the proposed rules, presented by Regional Aid Commissioner Johannes Hahn, will direct the almost €350 billion of funds towards the main priorities of the EU’s 2020 strategy on growth and jobs.