Saturday

10th Dec 2016

EU hopes for 'big leap' with fiscal, political union plan

  • EU council President Van Rompuy (r) wants to reach a "common understanding" on how to further integrate the eurozone at this week's summit (Photo: consilium.europa.eu)

EU officials have drawn up a far-reaching plan that would eventually turn the eurozone into an outright fiscal union, but acceptance by EU leaders - whose powers it reduces - will require a major leap of political faith.

The seven-page document suggest that ultimately the 17-nation single currency area will need a treasury office and a central budget.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

Among the short-term changes required is the de facto handing over of budget power and economic policies to the EU level.

"Upper limits on the annual budget and on government debt levels ... could be agreed in common," says the paper. Budgets that breach fiscal rules would have to be altered.

A banking union "should evolve as soon as possible." Currently it is difficult to get a picture of the financial health of national banks, while taxpayers foot the bill when things go wrong.

Supervision of all banks would be at the European level and the EU authority would have "pre-emptive intervention powers." The paper - drawn up by the presidents of the European Commission, European Council, Eurozone and European Central Bank - moots giving the European Central Bank the ultimate authority.

In the medium term, so long as a "robust framework for budgetary discipline and competitiveness is in place, some form of debt mutualisation "could be explored."

Meanwhile, labour policies and tax polices - until now a no-go area for the European Commission - will no longer be exempt. An integrated economic eurozone will need "co-ordination and convergence in different domains of policy" says the paper explicitly mentioning "labour mobility" and "tax coordination."

"Let me tell you here that fiscal union is about much more than just euro bonds. It also means more co-ordination in taxation policy and a much stronger European approach to budgetary matters," said commission President Jose Manuel Barroso at the European Policy Centre in Brussels on Tuesday (26 June).

"Faced with this stark reality, standing still is not an option. A big leap forward is now needed."

The paper will form the basis of what are likely to be heated discussions at the EU summit at the end of the week. It is also due to be discussed by the finance ministers of France, Germany, Spain and Italy, meeting in Paris on Tuesday evening.

The ideas in it are supposed to reassure markets that eurozone leaders are politically and financially committed to the single currency. If the paper gets the go ahead, the group of four presidents will will draw up a detailed plan with a timetable for putting measures in to place by the end of the year.

The blueprint is likely to aggravate a key faultline between France and Germany, exposed once again last week. Berlin wants more powers transferred to Brussels if it is to agree to underwriting the debt of other countries. Paris - traditionally reluctant to hand powers to the European Commission - says solidarity must come first.

More broadly, it will test EU leaders commitment to the eurozone - budgetary matters and the right to decide how and on what to spend money go to the core of what it means to be a state.

EU public lacks voice on banking laws

The complexity of financial laws and lack of NGO resources means the “man in the street” has little say on EU banking regulation, the EU Commission has warned.

News in Brief

  1. Council of Europe critical of Turkey emergency laws
  2. Italian opposition presses for anti-euro referendum
  3. Danish MP wants warning shots fired to deter migrants
  4. Defected Turkish officers to remain in Greece
  5. Most child asylum seekers are adults, says Denmark
  6. No school for children of 'illegal' migrants, says Le Pen
  7. Ombudsman slams EU Commission on tobacco lobbying
  8. McDonald's moves fiscal HQ to UK following tax probe

Stakeholders' Highlights

  1. Swedish EnterprisesHow to Use Bioenergy Coming From Forests in a Sustainable Way?
  2. Counter BalanceReport Reveals Corrupt but Legal Practices in Development Finance
  3. Swedish EnterprisesMEPs and Business Representatives Debated on the Future of the EU at the Winter Mingle
  4. ACCASets Out Fifty Key Factors in the Public Sector Accountants Need to Prepare for
  5. UNICEFSchool “as Vital as Food and Medicine” for Children Caught up in Conflict
  6. European Jewish CongressEJC President Breathes Sigh of Relief Over Result of Austrian Presidential Election
  7. CESICongress Re-elects Klaus Heeger & Romain Wolff as Secretary General & President
  8. European Gaming & Betting AssociationAustrian Association for Betting and Gambling Joins EGBA
  9. ACCAWomen of Europe Awards: Celebrating the Women who are Building Europe
  10. European Heart NetworkWhat About our Kids? Protect Children From Unhealthy Food and Drink Marketing
  11. ECR GroupRestoring Trust and Confidence in the European Parliament
  12. UNICEFChild Rights Agencies Call on EU to put Refugee and Migrant Children First