BRUSSELS — Germany’s push to exempt a national champion from future EU oversight could imperil a ministerial deal to integrate the bloc’s financial markets and compete with Wall Street.

Over the coming days, finance ministers will discuss the most contentious parts of their countries’ positions on Brussels’ “market integration and supervision package” of bills, or MISP. They’ll begin with a dinner on Thursday in Luxembourg, as the Council moves toward its official negotiating position.

The hope is that ministers will then sign off on the compromise deal, brokered by Ireland in its role as leader of the EU’s rotating presidency, at the ministerial Ecofin gathering on Friday. This would be a major step forward for the EU’s 10-year bid to create a U.S.-style capital market.

But a push by Germany to exclude one of Europe’s biggest stock exchanges from central EU oversight could turn dinner into a food fight.

This exemption remains in the current compromise position among EU capitals after Berlin refused to give up local supervision of its stock exchange behemoth Deutsche Börse over fears of job losses and ceding power to a bloc-wide entity, despite central supervision being one of the key tenets of the MISP package.

It’s sparked protests from smaller countries, which feel the compromise would disproportionately benefit their larger neighbors — and could scupper the entire deal.

The carveout is “polluting the whole debate” by giving a “huge gift to Germany” while other countries receive nothing in return for their support, one diplomat said.

Another went further. “No deal is better than a bad deal,” a senior EU official said ahead of Friday’s meeting.

One market

Securing a deal on MISP this year is central to the “One Europe, One Market” plan that the EU’s three political leaders in Brussels agreed to in April. EU governments have invested significant political capital into MISP in a bid to turn the bloc into an investment hub where innovative companies can find investors without having to leave for deeper pockets on Wall Street.

Getting sign-off from the EU’s 27 governments would be a major coup for Dublin, which is chairing legislative negotiations in Brussels until the end of the year.

However, six diplomats close to the negotiations gave contrasting views on whether a deal would be possible this week. According to one, anywhere from eight to 17 countries could band together to block an agreement.

The diplomats did concede that the countries opposing the carveout are not unified in their position, however, as they all want different things from a potential deal. But the Deutsche Börse issue remains the most contentious.

After the German government made it clear it would not support a deal on the package unless Deutsche Boerse was carved out, the EU’s six biggest economies came up with a plan over the summer to exempt the exchange from EU-wide supervision by the new “supercop” European Securities and Markets Authority.

The German state of Hesse, Deutsche Boerse’s current supervisor, has consistently opposed giving up the role, fearing job losses and waning influence if the exchange giant is instead overseen by ESMA. The carveout, based on trading thresholds and geographical footprint, would also benefit Spain’s main stock exchange and another German trading platform, Tradegate.

In practice, scoping out the German giant would hollow out the ambition of the MISP plan. Moving to a central supervision model for the EU’s biggest exchanges and other financial plumbing firms like clearinghouses and central securities-depositories has been the thorniest political issue throughout negotiations.

Although ESMA would still oversee large firms such as the stock exchange group Euronext and Nasdaq’s European arm, the watchdog would have fewer staff and less funding, and ultimately be less powerful if it were not responsible for supervising Deutsche BBörse 

The Belgian government in particular isn’t taking the plan lying down. According to two diplomats close to the talks, Belgium’s prime minister, Bart De Wever, could raise the subject at the European Council later this month if a majority of ministers push the carveout through.

Central to the Belgians’ frustration is the fact that their finance giant, the securities-depository group Euroclear, will move to ESMA supervision, while Belgium was shut out of talks among the “E6” supergroup of the bloc’s largest economies, according to multiple diplomats involved in the group’s formation.

If big countries won’t give up the Deutsche Börse carve-out, small countries could win changes to ESMA’s governance structure in exchange for supporting a deal, according to three of the diplomats. They want national finance watchdogs to have more influence in ESMA’s decision-making, while some also want changes to the authority’s funding structure. Large countries want ESMA to be overseen by an independent, powerful executive board akin to the European Central Bank’s. 

“It’s MESS, not MISP,” one diplomat quipped to POLITICO. 

Giovanna Faggionato contributed reporting.

DUBLIN — Ireland will create a new national savings system to spur tax-free investments in stocks and bonds, the government announced Tuesday as the centerpiece of its next tax-cutting budget.

The measure is designed to woo at least some of the more than €170 billion currently resting in Irish savers’ bank accounts, most of which is earning paltry rates of interest, into riskier investments with much higher potential returns.

The move represents Ireland’s national riposte to pressure from several other European Union countries to boost consumer investment in stocks and bonds on a union-wide basis. Ireland is among the EU members resistant to creating a proposed “Savings and Investments Union” regulated from Brussels, not Dublin.

Presenting his 2027 budget, Finance Minister Simon Harris told lawmakers that residents would be able to open Irish Investment Accounts starting in July. He said individuals could use those accounts to invest in stocks, bonds and exchange-traded funds (ETFs), many of which are listed on the Dublin stock exchange, via a list of state-approved banks and brokers.

The first €50,000 in each account would not be taxed, while any balances above that would be charged 1% on the excess amount, he said. This means a fund valued at €100,000, for example, would face an annual tax liability of €500.

Under the plan, most investors would take a few years to grow their accounts to the €50,000 threshold. Annual contributions to each account would be capped at €12,000, Harris said, underscoring the center-right government’s aim to spur investment by middle-class savers, not the wealthy.

This approach, he said, “strikes a balance between encouraging small-scale investment, while ensuring that those with greater means continue to make a fair contribution.”

Investment firms offered a muted welcome, noting that Harris’ regime retained significant disincentives.

“Today was the government’s chance to get Ireland investing, and it has missed it,” said Michael Healy, chief executive of online trading and investment platform IG Consumer.

Healy dismissed Ireland’s plans as “fundamentally flawed,” as they will tax all balances above €50,000, regardless of whether they have recorded any gains that year. “Someone could face a tax bill even when their investments have fallen in value — effectively paying tax on losses,” he said.