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30th Oct 2020

Berlin and Paris propose radical eurozone integration

  • European Central Bank moving into its new building in Frankfurt last year (Photo: ecb.europa.eu)

The eurozone should have its own budget, an institution which can raise taxes, a separate body inside the European Parliament, and wage harmonisation, France and Germany have said.

These and other controversial ideas for far-reaching integration of the EU’s single currency zone were laid out in an op-ed by the French and German economy ministers published in several European newspapers on Thursday (4 June).

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  • Macron and his German counterpart said 'Europe cannot wait any longer' (Photo: OFFICIAL LEWEB PHOTOS)

“France and Germany have the responsibility to lead the way, because Europe cannot wait any longer”, Germany’s Sigmar Gabriel and France’s Emmanuel Macron said.

The Gabriel-Macron proposal appears to go much further than a plan which the French and German leaders are to put forward at an EU summit later this month.

According to news reports, German chancellor Angela Merkel and French president Francois Hollande are to propose further eurozone integration but without EU treaty changes.

But the Gabriel-Macron would entail treaty reforms to lay out the new division of powers.

Under current rules, only national governments have the power to raise taxes.

But Gabriel and Macron speak of “the creation of a preliminary eurozone budget”, with “its own revenues (for instance a common financial transaction tax, as well as a small portion of a harmonised corporate tax) and would provide for borrowing on that basis”.

They say the 19 eurozone countries should have “consistent, though not necessarily equal, minimum wages”.

Eurozone members Italy, Austria, and Finland currently don't have a national minimum wage.

The French and German ministers believe their measures would “establish a truly level playing field across the eurozone, and ensure that tax competition and social dumping don’t create races to the bottom and unco-operative fiscal devaluations.”

They say the European Stability Mechanism should be transformed into “a proper European Monetary Fund”.

They add that the eurozone should have a distinct presence in the EU institutions, with a dedicated “euro commissioner” and a eurozone “grouping” in the EU parliament.

They ask: “What about the other member states?”

Their answer is that: “A stronger eurozone should be the core of a deepened EU. We need a simpler and more efficient union, with more subsidiarity and streamlined governance.”

“The fundamental instrument of EU integration is the single market; we should therefore make a new step towards a better-integrated internal market, with a targeted approach on key sectors like energy and digital economy.”

The Gabriel-Macron plan is likely to be met with heckles from eurosceptic parties and from some non-euro states.

It comes just over a year after eurosceptic parties scored their biggest win so far in European Parliament elections, and less than a week after UK prime minister David Cameron visited Paris and Berlin to convince Hollande and Merkel of his goal to get “a better deal” for the UK in Europe.

Macron and Gabriel also suggest new methods to increase pro-EU sentiment, or what they call “a stronger sense of community”.

They say the Erasmus student exchange programme should be expanded to include “every European reaching the age of 18” who wants to spend “at least one semester in another EU country, to either study or follow an apprenticeship”.

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