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09/12/2016

French strategists map reforms to counter EU defiance

EU Priorities 2020

French strategists map reforms to counter EU defiance

Jean Pisani Ferry, France’s Commissioner-General for Policy Planning and former Director of Bruegel. [France Stratégie/ Flickr]

France Stratégie, a government advisory body, has issued a report outlining the reforms it deems necessary to keep the European project alive and counter rising French Euroscepticism. EurActiv France reports.

The comparative study, titled ‘What kind of France in ten years? A ten-year plan’ (‘Quelle France dans dix ans? Les Chantier de la décennie‘), outlines ways of tackling the growing sense of disillusion with the EU in France.

An entire section of the report, “Finding France’s European ambition“, is dedicated to finding a solution to this malaise.

The study was conducted under the auspices of Jean Pisani-Ferry, France’s Commissioner-General for Policy Planning.

“Ten years is enough time for change. That’s the goal of the study. In this way, it is optimistic and wants to advance a better economic future,” said Pisani-Ferry, also professor of economics at the Hertie School of Governance in Berlin and former director of the Brussels-based Bruegel think tank.

The EU: ‘Too diverse to be strong, but too big to be agile’

The economic crisis has weakened Europe socially, economically and politically. Yet the report argues that the EU still has real economic potential. The European market is so big that no multinational company can avoid its norms. Although European standards were harmonised for all products and services, financial, energy and telecommunication services were not.

“This means the European market’s economic potential is still being under-exploited. Too diverse to be strong, but too big to be agile, the Union is too often stuck in a disappointing interim period,” the report says.

The authors of the report emphasise the importance of the European internal market. A more integrated European economic area would lead to greater transparency of standards  a level playing field in terms of competition, as well as encourage further investment and economic growth.

Digital integration and financial sectors

Concretely, the Strategic Analysis Centre calls for greater integration of the digital and financial markets. “This will draw in services that are often segmented,” the report says, adding more efficient governance is needed to achieve this.

The report also calls for greater fiscal and tax integration, a project that will have to be led by a vanguard of EU countries.

“A common corporate tax level, converging of national rates and methods of taxing companies in Europe would promote efficiency and equality,” the report says.

At a social level, the report recommends a Single Labour Act to promote economic growth in Europe. As well as greater labour mobility in Europe, it would increase the portability of social rights. The authors support a European minimum wage, forging mutual recognition of competencies and establishing a cooperation agreement to fight illegal employment.

Governance reform in the eurozone

The report proposes three possible paths to strengthen the eurozone.

  • The first is Federalism, which requires transferring further powers to the European level. “This model presupposes a budget, common policies, an executive body and a parliament like the European Parliament.” Solidarity is central to such a system, which would allow struggling countries to avail from loans financed by a common budget.
  • The second path is labelled ‘institutionalised cooperation‘. This is a system based on tight budget coordination and reciprocal assurances between member states, which could go as far as mutually guaranteed commitments – codename for Eurobonds – in exchange for greater budgetary surveillance at EU level.
  • The third way combines monetary integration and substantial budgetary autonomy, without solidarity mechanisms. In such a system, member states accept the possibility of national bankruptcy. “This model is based on the supposition that centralised control of national policies is an unsustainable situation.”

The first model, similar to the German federal system, has been sidelined over the past few years for political reasons. The second model, closer to the French tradition, has been refused by the German Constitutional Court. Finally, the third model of decentralisation is what the report calls “the default choice.”

Reforming the ESM and ECB

Reforms to the European Stability Mechanism (ESM) and the European Central Bank (ECB) are essential in strengthening the eurozone. The report argues that the ESM should be developed into a European monetary fund.

“The ESM, which was established to help the eurozone’s struggling countries, is currently the Eurogroup’s financial arm, but lacks negotiating and monitoring powers. Instead, these powers are held by the European Commission, which does not assume political responsibility for them,” the study says. Transforming the ESM into a European monetary fund would give the eurozone the tools necessary for becoming the future European treasury.

The ECB’s mandate must be completed to promote financial stability. The ECB took important initiatives during the economic crisis in order to preserve the integrity of the eurozone. National authorities recently transferred the supervision of their banks to the ECB, but the report argues that this must go further.

“Financial stability in all financially developed countries is becoming a major responsibility for the central bank, which still needs specific governance and procedures for settling accounts. Increasing the ECB’s mandate to promote price stability would reinforce the legitimacy of its new role.” 

Background

Following a government seminar in August 2013, François Hollande and the then French Prime Minister, Jean Marc Ayrault, commissioned a report on France's major issues for the next ten years. The report is titled "Quelle France dans dix ans?" (What kind of France in ten years?).

After consulting with social partners and different actors from civil society, France's General Commissioner for Policy Planning presented the report. It is divided into five parts: restore trust in the republican model, reconcile the economic and social level, establish responsible development, invest in the economic recovery, and find a European ambition for France.

The aim of the report is to provide a roadmap for the next ten years of France-EU relations and to tackle growing disillusion towards the EU in France.

Timeline

  • 7-8 July: Social conference on employment in the French Economic, Social and Environmental Council in Paris to discuss the report.

Further Reading

Centre for Strategic Analysis (CGSP)