In this position paper, the Group of Socialists and Democrats in the European Parliament calls for a major overhaul of Europe's Economic and Monetary Union. It contributes to identify, and to define, why and how EMU should evolve from the near to the more distant future.
The Eurozone has failed to deliver on the main goals of the European Union in terms of sustainable growth, employment, social progress, cohesion and stability.
Flaws in the initial design of the single currency have made the effects of the global economic crisis deeper and longer, generating huge economic costs, social suffering and political tensions within and between Member States.
This position paper claims that without major reform, aiming at the completion of EMU, neither will the crisis be properly overcome, nor will the EU succeed its necessary transformation into a democratic, sustainable, cohesive and competitive growth model, without which it will ultimately fail to safeguard and reinforce its democratic and social values and standards in an increasingly competitive and fast-changing world. To guarantee the EMU's sustainability in the long run, the EMU reform process should also involve re-launching a dynamic process of structural convergence amongst its member countries and regions within an inclusive and competitive Single Market.
This reform of EMU must address its inherent flaws and weaknesses upfront, through courageous and intelligent political, economic and social change. Key proposals made by the Group of Socialists and Democrats include:
- A major qualitative leap in democratic decision-making processes;
- Closer economic policy coordination and the development of an EMU economic policy based on a truly joint approach regarding the Eurozone's aggregate fiscal stance - in particular, to take proper account of the impact of aggregate EMU fiscal policy on the Eurozone’s domestic demand and its financial resources - regarded as a necessary condition for an improved macroeconomic policy mix, to allow for proper aggregate demand management and clear measures to reduce social and gender inequalities;
- Balanced monitoring of national current accounts in order to address both deficits and surpluses through country-specific recommendations in a way that supports structural convergence
- A progressive growth agenda combining much higher investment and socially balanced structural reforms;
- Common fundamental social standards and a common consolidated corporate tax base to prevent a social and a fiscal race-to-the-bottom between countries;
- An EMU fiscal capacity, encompassing own resources and a borrowing facility with two main aims:
- Providing a tailored instrument to improve the absorption of country-specific economic shocks;
- Boosting social investment, helping to restore structural convergence between Eurozone members during the crisis exit phase
The Group of Socialists and Democrats calls upon the Presidents of the European Commission, the Euro Summit, the Eurogroup and the European Central Bank to submit a report on the completion of EMU to the European Council addressing openly the major challenges ahead, and to do so with the full involvement of the President of the European Parliament. This Five Presidents’ report should provide a comprehensive and far-reaching roadmap for the gradual completion of EMU, with clear proposals for more immediate reforms and for longer term changes, including changes which will require a reform of the existing Treaties.
It equally calls upon the European Council to commit to a democratic process for implementing the overhaul of the existing EMU, as outlined in this position paper. It will spare no efforts in coming months to drive this ambitious and necessary reform agenda forward.