Analysis: Flexibility and the future of the Union

There are powerful objective arguments, both economic and political, for reviewing substantially the workings of the European single currency in a more integrative direction, says a Federal Trust working group report. Until now, however, the Union’s national governments have not been able to translate these arguments into effective action. Whether they will be able to do so in the coming decade is incomparably the most important piece in the jigsaw of the European Union’s future development.

The European single currency was the first major project of the European Union to be set up without the initial participation of all its members. It was then seen by many commentators as heralding an era of European flexibility, in which the

consensual and universalist philosophy of the Treaty of Rome was replaced by varied and differentiated forms of integration. It is therefore appropriate that precisely the single European currency now seems likely to pose in its most acute form the problems arising from differentiated integration for the European Union. There is a real possibility that the evolution of the European single currency will usher in a fractured rather than flexible European Union.

If, as seems possible (although by no means certain) the members of the Eurozone conclude that for both political and economic reasons the better functioning of the single European currency requires a greater pooling of their national sovereignties then the implications of that decision for the Union as a whole will be profound. 

In the case of the United Kingdom this enhanced degree of sovereignty-sharing within the Eurozone could well act as a further barrier to British membership of the euro. The UK’s long-term estrangement from the single European currency could in its turn make it more likely that others such as Sweden, Denmark, Poland and the Czech Republic would also wish to remain outside the Eurozone. 

It is difficult to believe that such a fissure could remain indefinitely without consequences for the institutional integrity of the Union. The roles of the European Parliament, the European Commission and even the European Court of Justice could not but be affected by a European Union in which there was such an asymmetry between the level of political and economic integration achieved between (probably) a majority of its members and that achieved by (probably) the minority. 

The great unresolved question for the future of the European Union is whether in twenty years time the euro can most appropriately be seen as part of a ‘multi-speed Europe’in which all member states, including Britain, eventually participate; as a ‘core’ or ‘vanguard’ which constantly exercises increasing pressure on those states not yet members to join; or as the final parting of the ways between those member states willing to share large and probably increasing measures of their national sovereignty and those unwilling to do so. 

The answer to that question will emerge in fits and starts over the coming decades. There are powerful objective arguments, both economic and political, for reviewing substantially the workings of the European single currency in a more integrative direction. Until now, however, the Union’s national governments have not been able to translate these arguments into effective action. Whether they will be able to do so in the coming decade is incomparably the most important piece in the jigsaw of the European Union’s future development.

This is only one small excerpt of the report. The working group is chaired by Sir Stephen Wall, with Federal Trust Director Brendan Donnelly a co-rapporteur and MEP Constitutional Affairs spokesman Andrew Duff (ALDE) among the group members. 

Click here   to go to the Federal Trust’s website to access the full version of the report