EU prepares for ‘new stage’ in economic union

European leaders will discuss plans for deeper economic integration in the euro zone at their next meeting in June, after an inconclusive summit yesterday (23 May) saw open divergences between France and Germany over ways to kick-start the EU's sluggish economy.

European Council President Herman Van Rompuy will present a report exploring ways to deepen economic integration in the euro zone when EU leaders hold their next meeting on 28-29 June.

Speaking to the press after an EU summit in Brussels, which lasted until 01.00 am, Van Rompuy announced that “we need to take Economic Monetary Union to a new stage.”

"I will report in June, in close co-operation with the Commission President, the Presidents of the Eurogroup and the European Central Bank on the main building blocks and on a working method to achieve this objective,” he said.

Long-term project

The summit saw French President François Hollande and German Chancellor Angela Merkel openly state their differences on Eurobonds, which France wants to introduce rapidly as a way to mutualise debt in the euro zone and reduce the borrowing costs of countries like Spain and Italy.

Speaking after the summit, Merkel admitted that “each party put their own opinion" on the table and "spoke from different perspectives". "It was a very divergent conversation,” she said.

Hollande did not try to hide Franco-German divergences. "For now, Germany's line of thinking is that Eurobonds, if I give the most optimistic version, could only be an end point, whereas for us they are a starting point. It's true that there is a difference."

Van Rompuy said Eurobonds were not off the table completely but could only be considered after a new stage in the EU's fiscal and economic integration.

"Euro bonds were discussed in the specific chapter of the long-term project of deepening the monetary and economic union," Van Rompuy said. "Nobody was asking for an immediate introduction. This would take time. It is the end of a process to consider what the legal implications of all this are."

Fiscal union

The European Central Bank's President Mario Draghi was on the same page. Issuing jointly backed European debt would not make sense until the euro zone reaches some kind of fiscal union, he said after the EU leaders meeting.

"Euro bonds make sense when you have a fiscal union, otherwise they don't make sense," Draghi told reporters in Brussels

Asked later by EURACTIV if some kind of central EU finance ministry would be considered, Van Rompuy did not dismiss the idea but said it was just one among a number of options being discussed.

“There are a range of possibilities but we need the building blocks and the roadmaps,” he said. “We need to see what can be done within the remit of the treaties, and for that we need the Brits, but it’s too soon to say exactly what will be considered.”

German leaders, for their part, seemed open to the idea of a fiscal union.

Germany’s European Central Bank executive board member, Jörg Asmussen, said ahead of the summit that the euro zone should be backed by “a fiscal union and banking union as well as a democratic legitimised political union”.

His words were echoed by Finance Minister Wolfgang Schäuble who recently argued in favour of a directly-elected European Commission president with greater control over the EU's fiscal policy.

After the meeting the Prime Minister of Slovakia Robert Fico said that he expected more from this informal summit, EURACTIV Slovakia’s special envoy to Brussels Zuzana Tu?ekova reported.

“The result from this summit is that even if [the] EU creates conditions to support growth by, for example, strengthening the European Investment Bank, it will be mainly on the member states of the euro zone and the EU [to decide] what action will be taken.

“I am leaving this summit convinced that it is up to us at home in Slovakia, what action we will take and to what extent we are able to prepare projects to support economic growth. But we can not expect that in the short-term we will be able to offer something at the European level [that] Slovakia can immediately use.”

EU leaders were meeting in Brussels on 23 May for an informal summit dedicated to growth.

Following the election of French socialist President François Hollande, some EU leaders, backed by Brussels, have tacked firmly towards the growth agenda, with discussions expected to focus around a new "growth pact" for Europe to complement the treaty on fiscal discipline.

  • 28-29 June: Formal EU summit in Brussels to finalise growth agenda.

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