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THE STATE OF THE EUROPEAN UNION
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Conclusion
The process of reflecting on the future of the EU
that the institutions and Member States of the
Union are currently engaged in offers a window
of opportunity to strengthen an imperfect mo-
netary union which has exacerbated imbalances
and social inequality.
The successful establishment of a coalition
government in Germany, with a more ambitious
European agenda, combined with the stimulus
from President Macron and from the new presi-
dent of the Eurogroup, and the support of a
majority in the European Parliament are all posi-
tive factors that provide grounds for optimism
about the prospects for progress in 2018.
Reform of EMU needs to be ambitious. In
this respect, the completion of Banking Union is
both a necessary and a minimum condition, but
this reform needs to go much further and inclu-
de both deepening (fiscal and financial integra-
tion and the provision of dedicated resources)
and rebalancing (addressing social and labour
market imbalances) along with increased inves-
tment and the adoption of an EU-wide ap-
proach that reinforces the Union’s democratic
legitimacy.
Progress has been limited to date, due to a
political stalemate over risk reduction and risk
sharing, and more recently due to instability and
ungovernability in key countries, notably
Germany. However, the structural differences
between the countries of the eurozone persist,
and Germany and the Netherlands (among
others) are not prepared to accept the mutuali-
zation of risk while they believe the level of risk
to remain so high. It seems clear that this is an
excuse to avoid progressing with the much-nee-
ded agenda of deepening and rebalancing the
eurozone. And we should remember that much
of the risk reduction programme has already
been implemented, while risk sharing has not
been addressed. However, because this risk is
actually systemic, the reality is that it is already
shared across the eurozone – what has not been
shared is the cost.
Without profound reform of Economic and
Monetary Union, there can be no solid founda-
tion on which to build the Europe of the future.
And the cornerstone of eurozone stability is
economic and social convergence between the
economy’s Member States, which should be an
absolute priority for the EU.