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THE STATE OF THE EUROPEAN UNION
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– A progressive growth agenda combining
much higher investment and socially bal-
anced structural reforms.
– Common fundamental social standards and
a common consolidated corporate tax base
to prevent a social and a fiscal race-to-the-
bottom between countries.
– An EMU fiscal capacity, encompassing own
resources and a borrowing facility with two
main aims:
• Providing a tailored instrument to im-
prove the absorption of country-specific
economic shocks.
• Boosting social investment, helping to
restore structural convergence between
Eurozone members during the crisis exit
phase.
In June 2015, the Five Presidents’ report
made proposals for stronger economic, financial
and fiscal union with greater democratic ac-
countability and legitimacy. It foresees a two-
stage process towards completing the EMU,
involving essentially: 1) completion of banking
union and greater structural convergence based
on the existing Treaty framework, and 2) crea-
tion of a euro area fiscal stabilization function.
In October 2015, the Commission followed
this up with a first set of legislative proposals
concerning the first stage of EMU completion
(national competitiveness boards, advisory
European fiscal council, external representation
of the Euro area) and a communication explain-
ing how the European Semester for policy coor-
dination would be revamped from the 2016
cycle onwards.
In November 2015, the Commission tabled
a legislative proposal on a European Deposit
Insurance Scheme (EDIS).
An unfinished job
The EU as a whole is confronted with a reality that
cannot be denied –the Economic and Monetary
Union has so far failed to deliver the main goals
set out in the Treaty on European Union: sustain-
able and balanced growth and price stability, with
full employment and social progress and econom-
ic, social and territorial cohesion.
This has been felt particularly hard through
the crisis.
After the initial European Economic Recovery
Plan of 2008-9 was replaced with a policy mix of
austerity and internal devaluation, a second re-
cession hit most of the Eurozone from 2011 on-
wards, youth unemployment and long-term un-
employment soared to unprecedented levels,
wages and collective bargaining systems have
come under severe attack, on out of four
Europeans are at risk of poverty or social exclu-
sion, with women being the most hit, inequali-
ties have risen, lower-income groups are exposed
to economic insecurity, investment collapsed by
nearly 20 % from pre-crisis levels, debt/GDP ra-
tios have worsened in many countries, and the
Eurozone is on the verge of deflation.
The internal divergences of the Eurozone
were magnified by the financial crisis and the
process of economic and social convergence
which has characterised European integration
for decades has been reversed.
This is already translating into serious politi-
cal tensions and risks, as anti-European and ex-
treme political forces are gaining important
ground in a number of Member States.
Unfortunately, none of this is yet over. The
mild recovery driven primarily by low oil prices
and expansionary monetary policies remains
fragile, deflationary risks persist, companies and
households are struggling to repay old debts
and sovereign debt/GDP ratios are likely to