04 March 2014

EIM February 2014: The UK and Europe – state of play after the Chancellor Merkel visit

However, a key theme was the benefits of the single market and the need to “renew Europe in keeping with the times”. Importantly, Chancellor Merkel recognised the failure in Maastricht “to back up monetary union with a strong economic union”. So it is not enough just to survive, but the aim must be to come out of this stronger than at the start. That requires “responsibility and solidarity”, more competitiveness, stronger European institutions, dismantling further barriers to trade, and “the euro states must back up monetary union with a strong economic union with a clearly-defined and sustainable architecture”. 

Perhaps the key passage was “Only through closer and more binding coordination of economic policy can we prevent ourselves in the long term from getting into another severe crisis in the euro area. In my view, this requires that we adapt the treaty basis for economic and monetary union quickly in a limited and targeted way in order to ensure lasting stability for monetary union.” So Germany will be happy to see a narrow change in the Treaty that focuses solely on deepening economic integration. That does not seem to leave much scope for repatriating a wide range of powers – disappointing many Tory Eurosceptics. But the Chancellor was at pains to stress the need to cut superfluous red tape and pay more attention to the principle of subsidiarity – a very small piece of red meat for Tory ‘sceps’.

So Chancellor Merkel’s central message was that the process of re-enforcing economic union by way of greater integration is a long way from finished. PM Cameron is likely to find that this process leaves the UK – sadly – ever more on the fringes of the EU. Even the new Czech government has pledged to become the 27th Member State to sign the TSCG (the Treaty that PM Cameron keeps saying he vetoed), seek to join the euro and, more immediately, join Banking Union.

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© Graham Bishop