Time for a stronger and more sustainable Economic and Monetary Union

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

Despite continuous efforts to reform and strengthen the Economic and Monetary Union, its architecture still remains to be completed. [pogonici/Shutterstock]

Despite continuous efforts by all decision-makers to reform and strengthen the Economic and Monetary Union, the European Economic and Social Committee (EESC) believes that its architecture still remains to be completed, writes Stefano Palmieri.

Stefano Palmieri is the president of the European Economic and Social Committee’s Section for Economic and Monetary Union and Economic and Social Cohesion.

The European institutions and national governments have to work towards an integrated, more democratic and more socially-developed EMU, which would better support sustainable growth and stability in Europe.

The Commission’s Winter 2020 Economic Forecast for the EU has just confirmed expectations for a continued subdued economic performance over the near and medium-term, with multiple domestic and international risk factors on the horizon.

We are deeply concerned about the social consequences of these developments and in particular the lack of social cohesion between and within the member states.

The European Council will in March adopt economic priorities which will steer the course of our economy over the next year.

A major priority must be to continue the process of deepening EMU, which should ultimately translate into higher investor and consumer confidence and stronger economic, social and environmental performance across the continent.

Many elements of a real EMU are still missing.

Up to now, EMU has essentially been a set of economic and monetary rules. At the EESC, our vision of EMU attaches equal weight to financial, economic, social and political integration.

This includes, among other things, a complete banking union, a deep capital markets union and the relevant fiscal instruments that can help the euro area member states to complement the European Central Bank’s monetary policy and stabilise investment and employment in the event of external shocks.

There are also serious macroeconomic and social imbalances amongst member states, which sooner or later risk taking a toll on the public purse and on people’s wellbeing unless they are addressed through the appropriate structural policies.

If properly financed and implemented, the recently proposed euro area Budgetary Instrument for Convergence and Competitiveness and the EU Reform Support Programme could support the implementation of the necessary future-oriented reforms and investments in all member states.

To share the benefits of integration across Europe and ensure that no one is left behind, we also call for social standards to be set in the member states to provide a high level of protection to vulnerable citizens.

Cutting across all these initiatives is the need for a more inclusive and democratic decision-making process with greater involvement of civil society, both at national and EU level.

At the same time, EU countries should have the courage to end unfair tax competition that harms them, their citizens and companies, particularly SMEs. They should also simplify business legislation and prevent tax avoidance and evasion to preserve public resources for productive investment.

It is not acceptable that potential tax revenue representing a total of €46 billion (0.32% of EU GDP) is lost annually to tax evasion.

Finally, to complete EMU and unleash its full potential, all EU countries that have pledged in the Treaties to adopt the euro should make every effort to do so as soon as possible.

Solidarity, social partnership, the environment and economic sustainability interconnect.

The divergent views among member states that prevent the completion of EMU are not insurmountable. But we must address them as a matter of urgency if our economy is to be able to meet challenges such as climate change, geopolitical shifts – including the rise of the Chinese economy – and an ageing population.

A deeper and more balanced EMU is also the basis for strengthening the international role of the euro and promoting the EU as a global economic player. Solidarity, trust and a common sense of purpose among member states should be the key words in this endeavour.

However, the recent populist and nationalist trends in the EU demonstrate that economic and social decisions must have broad support from the people of Europe. Here, the active involvement of the European Parliament, the social partners and civil society in the economic and social dialogue at EU level is a foundation for more inclusive policies.

Finally, our commitment to a carbon-neutral Europe by 2050 should not be forgotten. It will preserve the planet on which our very lives depend and must therefore be reflected in economic policy.

We must share climate policy impacts equally and manage the necessary transition to greener industries together with the social partners and other civil society stakeholders. At the same time, we should ensure that the negative social consequences of this transition are neutralised. To this end, it would be appropriate to introduce a “golden rule” for green public investment.

The past decade has been challenging for Europe and Europeans. I am convinced that if we take this opportunity to reform EMU by improving its governance architecture and finding the right policy mix to ensure resilience and sustainability, we will succeed in bringing the Union closer to the hearts and minds of its citizens.

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