During the European Parliament plenary session this past week, European Commission President Jose Manuel Barroso warned that future treaty changes would be needed to strengthen integration, despite opposition from some EU member states, including Britain.
Mr Barroso has previously put forward the view that the Eurozone faces a “systemic crisis” that needs deeper integration to resolve. He told the European Parliament: “Without increased integration, convergence and discipline, we will not be able to sustain a common currency”.
As a concession to the non-Euro members, the Commission President said deeper fiscal integration between Eurozone members should not put the 10 member states not in the single currency at a disadvantage. “Reinforcing the governance of the Euro is also reinforcing our union” were his exact words. However, it soon became clear that he was not really talking about the UK. Referring to the EU countries not in the Eurozone, Mr Barosso said: “Most of them, almost all of them, have a vocation to join the euro.” In other words, I am sympathetic to Eastern Europe but not the other three countries that are not in the Euro -Britain, Sweden and Denmark.
Mr Barosso made it clear that once Eurozone integration was achieved, it would be natural for the Eurozone countries to issue debt together – what he called “stability bonds”, what the markets call Eurobonds. He told the European Parliament that “Such bonds could, if well designed, strengthen financial stability and fiscal discipline in the euro area.”
However, in order to achieve this he will have to overcome Mrs Merkel. Germany, which has the lowest financing costs in the Eurozone, fiercely opposes any issuing of joint debt. Nevertheless, the European Commission will present a proposal on such bonds later this month.
Watch this space!
Labour MEPs will also be watching David Cameron very closely. Assuming that the proposed treaty change will involve all 27 member states and not just those in the single currency, will the Prime Minister leap on it to get powers back to the UK or will he make excuses and bottle out? If he is as good as his word and seeks to implement his much vaunted repatriation of powers, will he manage to do it or will he fall flat on his face?
As someone once said, we live in interesting times.