Thursday

23rd Mar 2017

Germany predicts EU 'political union' in 10 years

  • Schauble (l): 'In 10 years we will have a structure that corresponds much stronger to what one describes as political union' (Photo: consilium.europa.eu)

German finance minister Wolfgang Schaeuble has said his country is willing to discuss greater harmonisation of eurozone tax policy, adding that the next decade is likely to see Europe take significant steps towards closer political union.

The remarks, made in Germany's mass-selling Bild am Sonntag newspaper on Sunday (12 December), come as EU leaders look set to agree a limited EU treaty change this week in order to set up a permanent crisis mechanism to provide financial support to struggling eurozone states.

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.

Germany has previously opposed calls for a fully-fledged fiscal union within the euro area, but this position appears to be softening. "The basic decision was for fiscal and budgetary policy to be decided on the national level. If that is to be changed, then we can talk about it," Mr Schaeuble said in the high-profile Bild interview.

"In 10 years we will have a structure that corresponds much stronger to what one describes as political union," he added.

Meeting in the German town of Freiburg on Friday, French President Nicolas Sarkozy and German Chancellor Angela Merkel also said eurozone leaders must draw a fundamental lesson from the ongoing debt crisis and take steps towards political integration, including the harmonisation of tax policies or labour law.

These initiatives would foster greater convergence of eurozone economies and "show this is not just about currency issues but also about political co-operation, which has to be deepened," said Ms Merkel.

Only days earlier, Luxembourgish Prime Minister Jean-Claude Juncker had brandished Berlin as "un-European" over its refusal to support the creation of a common eurozone bond, a move some experts say would help shore up stability in the currently-distressed currency club.

Investors' doubts in the 16-member single currency economy have continued unabated this year, despite bail-outs for Greece and recently Ireland. Former UK prime minister Gordon Brown warned this month that the euro was headed for a day of reckoning early in the new year, a prediction seemingly backed up by new data from Italian bank UniCredit.

The bank calculates eurozone nations will have to refinance or repay €560 billion in debt next year, €45bn more than 2010 and the highest amount since the launch of the single currency in January 1999. The refinancing pressures could force other eurozone governments to call for support from the European bail-out fund, warn analysts.

In May EU leaders agreed to establish the €440 billion European Financial Stability Facility (EFSF), a triple-A rated institution based in Luxembourg which can issue bonds and lend to stricken eurozone states.

Now EU leaders look set to agree a limited EU treaty chance this week in order to turn the temporary facility into a permanent rescue mechanism around the middle of 2013 when the EFSF expires.

Irish Europe minister Dick Roche revealed the expected wording of the treaty tweak to Irish MPs on Friday, insisting the new language would not require a referendum in Ireland.

"Member states whose currency is the euro may establish amongst themselves a stability mechanism to safeguard the stability of the euro area as a whole. The granting of financial assistance under the mechanism will be made subject to strict conditions," reads the simple two-sentence paragraph to be inserted into the EU rulebook, reported the Irish Times.

Germany has successfully won its demand for the permanent mechanism to include the private sector sharing in future bail-out costs, reports the BBC. Such a decision could significant raise the borrowing costs of 'peripheral' eurozone states, as investors demand extra yields to cover the costs of a potential debt restructuring under the new mechanism.

At the same time, there are reports that changes are currently being considered to enable the temporary EFSF to buy sovereign bonds from distressed eurozone governments, a role currently being carried out by the European Central Bank via the secondary market.

Eurozone chief in 'drinks and women' row

[Updated] The Netherlands' Jeroen Dijsselbloem faces calls for resignation after saying that crisis-hit countries in southern Europe spent "money on drinks and women" before being helped by others.

Greek bailout talks to 'intensify'

Greece and its creditors will meet in Brussels later this week to unblock negotiations needed for a new tranche of financial aid, amid concerns over the country's economic situation.

Varoufakis back in push for ECB transparency

The former Greek finance minister Yanis Varoufakis and German left-wing MEP Fabio De Masi want to know whether the European Central Bank overstepped its powers when putting capital controls on Greek banks in 2015.

MEPs demand stronger rules against tax evasion

MEPs in the civil liberties and economic committees voted in favour of toughening up EU wide rules on tax evasion, as they gear up for institutional talks in March on the EU's anti-money laundering directive.

Stolen Russian billions ended up in EU states

Illicit money flowing out of Russia ended up in almost every single EU state, an investigation has found, posing questions on the integrity of Europe’s banking systems.

News in Brief

  1. Man arrested in Antwerp after trying to mow people down
  2. Marine Le Pen goes to Russia
  3. Dutch post-election talks prioritise green-right coalition
  4. EU summons Turkish envoy over threats to Europeans
  5. British police make first arrests in London terror probe
  6. EU commission has received Facebook reply on WhatsApp
  7. Rome expects thousands of protesters at summit
  8. Dijsselbloem says his comments had 'Dutch directness'

Stakeholders' Highlights

  1. EJCExpresses Concern That Extremists Still Have the Ability and Motivation to Murder in Europe
  2. European Gaming & Betting AssociationAudiovisual Media Services Directive to Exclude Minors from Gambling Ads
  3. ILGA-EuropeTime for a Reality Check on International Day for the Elimination of Racial Discrimination
  4. UNICEFHuman Cost to Refugee and Migrant Children Mounts Up One Year After EU-Turkey Deal
  5. Malta EU 2017Council Adopts New Rules to Improve Safety of Medical Devices
  6. Nordic Council of MinistersNordic Energy Research: How to Reach 100 Percent Renewable Energy
  7. Party of European SocialistsWe Must Renew Europe for All Europeans
  8. MEP Tomáš ZdechovskýThe European Commission Has Failed in Its Fight Against Food Waste
  9. ILGA-EuropeEP Recognises Discrimination Faced by Trans & Intersex People
  10. Nordic Council of Ministers25 Nordic Bioeconomy Cases for Sustainable Change
  11. Malta EU 2017Consumer Protection Laws to Be Strengthened by EU-Wide Cooperation
  12. European Free AllianceSupporting Artur Mas: Democracy and Freedom Cannot Be Convicted

Latest News

  1. May: London attacker was known to the police
  2. Ending the migrant deal with Turkey may save the EU
  3. Poland unlikely to face EU discipline on rule of law
  4. Rutte courted Wilders' voters, now he must deliver
  5. Barnier to UK: trade talks will come after settling accounts
  6. EU declaration to voice unity in troubled times
  7. Terror attack shuts down UK parliament
  8. Catalonia and Scotland at core of Europe's geopolitical conundrum