German EU insiders urge fiscal discipline ahead of 'Club Med' summit

BERLIN (Reuters) - Senior German EU insiders cautioned southern European states on Thursday against pushing for the bloc's fiscal rules to be eased, saying a strong and stable union was more essential than ever following the Brexit vote.

Greek Prime Minister Alexis Tsipras will meet on Friday in Athens with leaders from France, Italy, Spain, Portugal, Malta and Cyprus to discuss the future of the EU.

Tsipras aims to gain support for an anti-austerity push, a direct challenge to Berlin's demand for increased belt-tightening, ahead of a mid-September EU summit in Bratislava for the 27 states that will remain after Britain leaves.

German EU lawmaker Markus Ferber, a member of Chancellor Angela Merkel's conservatives' Bavarian sister party, told newspaper Die Welt he was concerned the southern countries could form a "coalition of redistributors" that would threaten Europe's financial stability.

"After Britain's departure, the 'Club Med' will have a blocking minority that can prevent all kinds of laws in Brussels that it does not like," Ferber said.

Germany's EU Commissioner Guenther Oettinger also expressed unease about the Athens meeting.

"It would not be good if the divide deepened between EU member countries with big budget problems ...and those with minimal fiscal issues," he told the Passauer Neue Presse.

Speaking to the same paper Ferber, vice chairman of the European Parliament's currency and economic committee, said Europe needed to stick together.

"We need a signal for more stability and that means that the existing regulations have to be implemented," he said.

He criticized German Finance Minister Wolfgang Schaeuble for backing an EU waiver of fines against Spain and Portugal for failing to bring their budget deficits below the EU's ceiling.

The decision, announced in July, underscored the EU executive's reluctance to impose penalties while economic growth remains slow and anti-EU sentiment is rising.

(Reporting by Andrea Shalal; editing by John Stonestreet)

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