European Union attempts to restore credibility to its fiscal rules suffered a setback on Tuesday after Germany's central bank said changes proposed by the European Commission were “generally detrimental” and sent “a false signal”.

The sharply-worded Bundesbank intervention is a blow for the commission as it seeks to rejuvenate the EU's stability and growth pact intended to ensure fiscal discipline in the eurozone which fell into disrespect after repeated violations by governments in Paris and Berlin.