Tuesday

25th Sep 2018

Opinion

A fig leaf of continental proportions

  • This new union must feature pan-European supervision of the banking sector (Photo: European Commission)

As focus moves from arguments between Greece and its EU partners to a possible bail-out for Spain, it is becoming clear that in efforts to solve the eurozone crisis EU leaders are missing the wood for the trees.

There is no denying that Greece’s predicament is perilous and its place within the eurozone under intense scrutiny. Efforts of Herculean proportions are required for the country to pay off its debts and reform its economy. Spain's challenges might not be of an existential nature to the same degree but the structural faults in its economy can have systemic consequences, not least due to its size. Nevertheless, the debt problems of individual member states are, in the grand scheme of things, only the side-show and unfortunately a distraction from the real issues.

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With growth figures all over Europe in depressingly low levels, investor confidence deflated, the banking sector in a permanent state of insecurity and the public exhausted by competitive austerity across the EU, the eurozone and the EU as a whole is in need of brave, pan-European solutions.

What we have instead is national politicians trying to solve European problems with national political consideration in mind. It’s like trying to open the front door of your building using your apartment key. It will never work.

Piecemeal, short terms fixes cannot replace permanent long term measures. For far too long European leaders in most EU capitals have shied away from articulating a vision for Europe, explaining it to their citizens and engaging in an honest, fact-based discussion with them about the direction the EU needs to take if it is to continue its successful path.

Dealing with the immediate economic problems of certain eurozone member states is of course important but the real emphasis must be put in constructing the foundations of a new political union. That must include fiscal integration as well as economic and monetary union. In the context of such integration the mutualisation of debt will be made possible and the sooner that happens the better. This new union must feature pan-European supervision of the banking sector and the proposals currently on the table are an important development to that end.

The eurozone also needs pan-European investment in growth-generating policies. Pro-cyclical austerity measures across the EU have been detrimental for the growth potential of the EU. Attention must be given to how to deliver targeted, value-for-money investment.

Spending at the EU level can deliver economies of scale, multiply returns and create savings for individual member states. The EU should pull its resources together and invest in research and education, high-end technology, green energy, telecommunications infrastructure and all the elements of the economy of the future that will pull the EU out of the current state of economic stagnation.

The eurozone needs European politicians to deliver European solutions to European problems. It needs pan-European political leadership. Who is up for the job?

The writer is Chairman of the European Movement UK. petros.fassoulas@euromove.org.uk

Interview

France and Germany moving towards closer political union

"You will be surprised in the autumn by the degree of movement that will have taken place in some member states," says Thomas Wieser, one of the economists preparing plans for banking union ahead of the October EU summit.

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Recession-hit Portugal is likely to miss its deficit target this year, the troika of international lenders is expected to conclude in September. Meanwhile, lower growth in Ireland may also bring troubles further down the road.

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