08 November 2011

Barroso: Further European economic integration will be needed

President Barroso stressed that the Economic Governance package will build the path for economic integration. Nevertheless, further economic integration is still needed, and that’s why the Commission will present by the end of November a new package of measures consisting of:

• a Regulation based on Article 136 of the Treaty which will introduce enhanced governance and fiscal surveillance for the Member States that have requested financial aid from the IMF, EFSF and the EC;
• a Regulation based on Article 138 which will create an efficient mechanism to allow the “euro” to speak with one voice in external debates;
• a Green Paper on the eurobonds project;
• an annual growth survey which will coordinate fiscal and economic policies of Member States.

Barroso said that Treaty changes may need to be considered in the medium/long-term. Barroso also mentioned that the EC is carrying out a study on different options for deeper European economic integration, which will be presented to the Council on 9 December.

Concerning the euro area, he highlighted that the rule is to belong to the euro area if the Member State belongs to the EU. On the FTT, he called on those who support a global FTT firstly to support the EU FTT because this will be the starting point to achieve the global FTT.

Peter Spiegel from the Financial Times was more sceptical and stressed that domestic politics are preventing the EU solution. He used the examples of Germany, Finland, Slovakia and the UK and stressed that each time “Treaty change” is mentioned, everybody starts to panic, which makes it quite improbable that it will happen soon. He went on to say that central banks are acting as lenders of last resort in many parts of the word (Fed, Bank of England and Bank of Japan) which allows those countries to borrow money at around 2 per cent. However, the ECB cannot buy bonds from Member States. According to Spiegel, the solution to the sovereign debt crisis would be to allow the ECB to be a lender of last resort in the euro area.