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16 November 2015

Reforming the EU and Completing the Economic and Monetary Union

News headlines about the EU are dominated by the migration crisis but it cannot detract from the importance of securing the economic and financial stability of the Eurozone, and thus the EU as a whole.

If that stability is lost, the consequences will dwarf the undoubted social dislocations flowing from migration.

If that stability is lost, the consequences will dwarf the undoubted social dislocations flowing from migration.

So it is regrettable that so little attention has been paid to the announcement of proposals for profound “reform”. The Commission published its proposals for “A deeper and fairer Single Market”. This should be seen as a vindication of the UK’s demands for reform in the EU’s single market. Prime Minister Cameron is pushing at a wide-open door! The proposal covers:

  • Consumers: when buying goods or services – online or face to face – they should not face “diverging prices, sales conditions, or delivery options,” without genuine reasons.
  • SMEs and start-ups are to be assisted in financing by Capital Markets Union. Crucially, the Commission will publish a proposal for business insolvency – a key problem for CMU.
  • Professionals:  improved opportunities for businesses and professionals to cross borders, especially by recognition of professional qualifications.

Co-incidentally (or perhaps not), the bulk of the necessary legislation should be announced during 2016 so the EU will be able to point to a major wave of economic `reform’ during the Brexit referendum debate. As George Osborne said in his recent Berlin speech “We want Britain to remain in a reformed European Union.”  However, there is another wave of `reform’ that many Conservative back-benchers may not welcome so much: a further round of deepening and integration within the Eurozone. To quote Osborne’s Berlin speech again “In the end the inexorable logic of monetary union will mean the treaties will have to be changed to support the financial and economic union required for a permanently stronger euro — the stronger euro we want you to build.”

In a decade, it is entirely foreseeable that only a few euro non-members. The “inexorable logic” has been well underway since the Greek crisis of 2010 and is now poised to push forward rapidly in the decade to 2025.

Full article available for consultancy clients here

© Graham Bishop

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