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Politics The ‘end of term’ feeling is spreading rapidly through the polity of the European Union. The probable departees are burnings their legacy and the ‘continuers’ are laying the foundations for the next phase. The great imponderable – the German Election - is nearly past but had curiously little to say about Europe, though what it did say was largely to leave the door open to substantial developments. As the politicians pat themselves on the back that the crisis is past (which it is not), their thoughts are turning to the political construct that ought to legitimate the economic governance that has been abruptly created to fend off the financial storm. That could put the UK on the edge of the periphery. More…
Finance The details of the driving forces that will re-shape Europe's post-crisis financial system are steadily emerging from the soup of day-to-day discussions on Banking Union. It is all too easy to miss the signals amongst nuances of debates on the precise arrangements for the Single Resolution Mechanism: ECOFIN laid out some strikingly clear Conclusions; the ECB set out the type of banking system it intends to achieve with the SSM; Commissioner Barnier reiterated that he will propose action on the Liikanen Group's report; and the likely Chair of the SSM argued that the ‘time is ripe' to review the risk-weighting of government debt. Add in the bailing-in of bank creditors, and the shape of the EU's financial system will be very different in the second half of the decade. More…
Economics Since the crisis erupted in May 2010, economic governance in the euro area has undergone a revolution and the full magnitude of the resultant measures is now apparent. November witnessed a barrage of economic forecasts and policy prescriptions from the European Commission. The crucial news for Europe is that the reports themselves and the ministerial discussion about them (as well as the subsequent reactions) show that the euro area has accepted the political necessity of collective oversight of its members. Such collective discussions of domestic policy details were inconceivable a decade ago. As mutual trust builds up, the euro area should be set for a further deepening of collective governance. More…
Budgets Welding the euro area into a single economy stepped up a vital gear as the ‘2-pack' was launched and the Fourth European Semester got underway. (Read the factsheet explaining the new budgetary rules and how the European Semester works here.) The key change is that the Member States have given the Commission - on behalf of ‘Europe' - the task of scrutinising Members' draft budgetary plans even before they go to national Parliaments. We have spent the last decade trying to pretend that spill-overs to other Member States would not be significant. Now we know that in a tightly integrated currency union, that is not true. Realistically, it will take the next decade to work our way out of these problems. In contrast to pontifications by the UK media, the Finance Ministers of the countries actually involved engaged fully with the new process and welcomed it. More…
Member States The Headlines alone illustrate the diversity of events around the EU [click on country links].