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19 December 2014

December 18th European Council: Where was the financial/economic content?

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Perhaps not much should have been expected from this Summit as the economic crisis is not extreme at the moment and the shadow of Russian activities in Ukraine was hanging over the meeting.

Nonetheless, it was an exceptionally anodyne outcome:

  • For financial markets, there was a generalised blessing of the concept of capital market union. It may be a year or two yet before the Heads of State/Government (HoSGs) actually come face to face with the practical implications of what is needed to give effect to this concept. They may be quite surprised to find the deepening of the integration of commercial law that is required and how deeply that goes to the heart of national economic systems. But that process simply underlines the hugely integrative financial and economic forces unleashed by the crisis. These are now irreversible without an equally grave crisis, so are probably irresistible.

  • For economic governance, the `Four Presidents’ are to be wheeled out again after their first, ground-breaking report in 2012. But this time, they are merely requested to produce an `analytical note’ in February.  Clearly, the HoSGs are not expecting any major change in the economic governance arrangements in the near future. But the spectre of France’s failure to reform sufficiently must surely be looming over them. For the moment, it may be easier to look the other way and cross fingers that the new `oil shock’ will bail us out!

Extracts from the Communique:

[...]The European Council invites the Commission and the Union legislators to step up work on key measures to increase the Union's attractiveness for production, investment and innovation, and to improve the regulatory environment for investments, including moves towards better integrated capital markets, while at the same time robustly pursuing the better regulation agenda aimed at transparent and simple regulation achieved at a minimum cost….


Closer coordination of economic policies is essential to ensure the smooth functioning of the Economic and Monetary Union. Following a discussion on this issue on the basis of an analytical note at the informal meeting of the Heads of State or Government in February, the President of the Commission, in close cooperation with the President of the Euro Summit, the President of the Eurogroup and the President of the European Central Bank, will report at the latest to the June 2015 European Council. The Member States will be closely involved in the preparatory work. 

Full document

© Graham Bishop

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