Economist Seamus Coffey said that under a fiscal union, countries should be able to deal with "macro shocks" without putting public finances under pressure. It has been suggested that moving towards fiscal union would be the answer to the bloc's sovereign debt crisis.
"If there was fiscal union, in relation to unemployment benefits, that they were ring-fenced at a European level, that you could say, look, your public finances are a mess but your social welfare payments, they're going to be maintained and they'll come from a central fund", University College Cork (UCC) lecturer Coffey said at the Oireachtas European Union Affairs committee. "Once you get yourself back on track and your economy is growing again you'll be a net contributor to that fund but for the moment you're a net beneficiary."
European policymakers, largely led by Germany, have moved toward the idea of greater fiscal union as the crisis rumbles on, although concerns exist about the extent to which sovereignty would be lost.
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