The European Union has agreed to create a “sanctions regime” targeting Lebanese leaders who have presided over an 11-month stalemate in forming a new government while the country’s economic crisis has drastically worsened.

The decision to target Lebanon’s bickering politicians came during Monday’s meeting of EU foreign ministers. Josep Borrell, high representative for foreign affairs and security policy, said the European officials had “reached a political understanding that a sanctions regime against those who are responsible for the situation should be established”.

Lebanon is suffering its worst ever peacetime economic crisis, exacerbated by a power vacuum since the current cabinet resigned shortly after the Beirut port explosion last August along with the failure to enact badly needed reforms.

The government has been in a caretaker role for 11 months, and acting premier Hassan Diab has insisted it does not have the authority to negotiate with the IMF for a rescue package — a step that other countries say is vital to unlocking financial aid.

Yet former prime minister Saad Hariri, handed the task of forming a new government by parliament in October, has been unable to establish consensus even on the number of ministers to be in the new cabinet. Ministries are typically shared out between the confessional parties in political horse-trading.

“It seems to me that the Europeans are more concerned with a search for the political solution . . . than the Lebanese politicians themselves,” remarked Borrell. He said the EU aimed to build a legal framework for sanctions before the end of the month.

Jean-Yves Le Drian, French foreign minister, told reporters that Lebanon had been in “self-destruct mode for several months”. The former colonial power in Lebanon has taken a lead role in trying to encourage Lebanon’s politicians to agree on a new government.

Le Drian said on Monday that the “legal framework” agreed by EU foreign ministers “will be a tool to pressure the Lebanese authorities” on government formation and reforms.

Although Le Drian has previously warned sanctions were on the table, Monday’s decision is the most concrete step towards penalties for Lebanese leaders. The sanctions are expected to target individuals rather than institutions. Financial sanctions often include asset freezes, but the EU officials did not give details.

Nearly two years into the economic crisis, Lebanon’s local currency has lost over 90 per cent of its value, and fuel and medicine shortages have become commonplace. Around half Lebanon’s population is estimated to have fallen into poverty.

The US has previously hit ex-Lebanese ministers and party leaders with sanctions — but largely in relation to their support for Hizbollah, a Tehran-backed Shia Islamist paramilitary group and political party.

Borrell said the EU’s regime “would be a balanced one” and be against “behaviour” not communities.