NB : cette note, produite en support de la conférence « Future Europe » du 20 juin 2018, est en cours de traduction en français.
The current missing pieces of the euro area architecture are clear to see but complex to address. There is however a small but crucially important window of opportunity to conduct further economic and political structural reforms. Important steps towards completing the Banking Union and Capital Markets Union have already been taken, but they have to be completed by a higher degree of economic convergence through a strengthened Economic and Monetary Union. This is especially important when considering that QE will soon reach its end: the ECB President Mario Draghi has rightly warned for years that the ECB cannot remain “the only game in town”.
The newly released European Commission multi-annual framework 2021-2027 budget represents about 1% of the EU’s GDP, far too small to have influence on convergence and resilience in the long run. While adjusting to the Brexit related budgetary challenges, a consistent EU budget should mostly be one that strikes the right balance between the funding of its traditional policies and the emerging priorities such as those relating to defense, migration, digital and green finances issues.
Most importantly, the call for unity, efficiency and democratic accountability made in the State of the Union address is still particularly relevant as a guideline for the completion of the Economic and Monetary Union:
- The EU’s political and economic integration means that the futures of both euro and non-euro Member States are already intertwined, and that a strong and stable eurozone is key to its members as well as to the EU as a whole.
- A stronger Economic and Monetary Union also requires stronger governance and a more efficient use of available resources: the current system still reflects a patchwork of decisions taken to face an unprecedented crisis.
- Completing the Economic and Monetary Union also means greater political responsibility and transparency about who decides what at the different levels.
For some time now, growing concerns have been expressed about the credibility of the Stability and Growth Pact rules. But calling them into question would attributing the Eurozone budgetary discipline to the financial markets. Such evolution would be profoundly detrimental to the EU principle of democratic accountability. What we call for instead is to reinforce Member States’ commitments to pursue converging economic policies while reforming the Euro area institutional framework to make it more resilient.