Emmanuel Macron toned down his ambition of completing the Economic and Monetary Union in a speech to the European Parliament on Tuesday (17 April), as he appears to be losing Germany’s backing and faces mounting pressure at home on unpopular economic reforms.
Only after some MEPs remarked that the French president had spoken very little about his proposals to reform the eurozone did Macron address the issue in his second block of replies.
Europe should show “more ambition”, the banking union needs to be completed and governments must pursue national reforms, like the ones currently being implemented in France, Macron said.
While Europe now has “instruments for responsibility”, with a strengthened Stability and Growth Pact to limit EU deficit and debt levels, he said what was now needed is “more solidarity”.
“There is no monetary area without a budgetary capacity that allows investment and a stabilisation function,” he said amid applause from the hemicycle.
The French president also defended the view that the eurozone needs “some democratic oversight”, echoing his own proposal to set up a parliament for the countries with the single currency.
If the EU fails to deliver on these issues, “we won’t be able to move forward in Europe,” he said.
Following Macron’s victory, EU leaders saw a unique moment to push forward with long-standing proposals to reinforce the euro before the next crisis hits.
His triumph came amid the best economic momentum the bloc has witnessed in a decade. But as the momentum is starting to wane almost a year later, his speech in Strasbourg was seen as a key moment to judge whether the europhile leader still upheld his grand vision for the euro area.
But Europe’s most difficult challenges, like strengthening the monetary area or progressing towards a fiscal union, were diluted in a five-point list to reinforce European sovereignty.
Although he mentioned the need to complete the banking union and setting up a budgetary capacity to stabilise eurozone members, the tone and the content of his remarks was a far cry from the passionate stand he took last year.
“Long-term economic power can only be built around a single currency, which is why I am so firmly attached to the ambitions of the eurozone,” he had said in September in La Sorbonne.
“It is through this Economic and Monetary Union, at its heart, that we can create the heart of an integrated Europe,” he emphasised back then.
Half a year on, Macron opted to keep a more cautious tone, knowing that he has to face rail workers on strike against his reforms in France, a that Germany opposes most of his proposals to bolster the EMU, a solid group of eight countries against his agenda, and that there is little time to reach an agreement before the June deadline.
“He is worried about who could be a potential partner,” commented the leader of the S&D group, Udo Bullmann.
The German MEP said that the Socialists would support him in his attempt to complete the EMU, although they disagree with the French president on his national reform plan
“Today we saw a [French] president that sees more the reality of Europe” and that is “positive” because this year is about delivering, said the head of the EPP group, Manfred Weber.
“We saw his realistic approach about what is possible and what is not,” he added.
In the conservative group, the migration issue is seen as a bigger priority for this year.
Macron’s quiet scale back came as opposition grows in Germany to other proposals seen as a priority for this semester, including a European Deposit Guarantee Scheme to protect European savers and turning the European Stability Mechanism into a European Monetary Fund.
EU leaders have fixed June as the deadline to reach an agreement on these proposals, before long-term ideas, including a eurozone budget, are discussed.
But officials doubt that EU countries would reach an agreement they aimed for.
“In December, it looked as if Europe was doing exactly that: seizing the momentum. But only four months later, I’m not so sure anymore. We seem to be losing the momentum, rather than seizing it,” European Stability Mechanism chief Klaus Regling said last week.
The loss of the political push comes as the latest eurozone economic activity indicators reflect that the region’s upturn is losing steam.
A composite Purchasing Managers’ Index dropped nearly two points in March, the biggest fall since the worst period of the crisis in 2012.
Growth in manufacturing slowed to an eight-month low in March while sluggish orders indicate that consumption is losing its vigour.