In recent years, economic and financial crisis has threatened the sustainability of the European Union. The general European response has been to push for more integration, especially in economic and fiscal policy in the Eurozone. Efforts to strengthen the Union this way are understandable, if not predictable. In any case, creating a stronger euro area can be beneficial for all the EU’s Member States, provided sufficient mechanisms are put in place to balance the rights of euro and non-euro countries.
With the answer to the question ‘Where is Europe going?’ remaining ever elusive, national leaders would do well to begin to lay out their long-term visions for Europe. The tone set by Britain and others will matter a great deal to this process. Although politicians often find it a challenge to think far ahead, if they managed it here, the outcome could be a better picture of what the EU should be and how it will get there. It could also be the key to saving Britain from the worst of euro-isolation.
In the absence of a vision, differentiated integration must not be allowed to excessively weaken the EU. It’s important to integrate where it’s needed, but this must be based on a shared understanding of how the EU should evolve. Whether on fiscal integration or political union, it is absolutely essential that no Member State end up alone on one side of the argument. The result would be deeper divisions and the very real prospect of Britain in particular leaving the EU.
What’s more, the record on enhanced cooperation has not been positive in the post-crisis period. Its implementation for the financial transaction tax has left much to be desired. Sharing of information from participating states to non-participating states has been patchy, and the Commission has appeared at times to take sides. This cannot become the standard for opt-in policymaking.
Consensus must continue to be the norm and non-participants must be fully informed of policy details so that EU-wide cohesion can be maintained as far as possible. As the Eurozone integrates itself, the differences between the euros and non-euros will only grow. Without keeping up genuine cooperation, the risk is accelerating the already inevitable gulf between Member States.
EU fragmentation can be tempered through two principle ways. The first is to reassure the non-participants by maintaining transparency and providing full information on policy initiatives. The second is to incorporate legal safeguards wherever possible to ensure the rights of non-participants. Above all, building a sustainable EU depends upon finding a common perspective which offers a shared framework on integration but which also allows the euros to deepen their links and the non-euros to have the choice not to participate.
One of the main obstacles for Britain is that non-euro and non-participating aren’t always the same. Current non-euro Member States may well sign up to opt-in integration, either because they plan on joining the euro in the short to medium term or they perceive it to be in their interest to take part regardless rather than be left out. It is perfectly possible that Britain may eventually find itself only one of a very small handful of EU Member States not part of the Eurozone.
How can the UK avoid a worst-case scenario of euro-isolation? Starting now, Britain should support strong protections for the non-euros in EU law. It must also engage with euro and non-euro Member States and ensure that the enhanced cooperation procedure is applied properly. Building some political goodwill in Europe wouldn’t go amiss either, however difficult that might be at present.
The prospect of a referendum on EU membership looms over Britain’s EU agenda. Nevertheless, government must continue to plan as if the UK will remain in the EU. European politics moves much too quickly for Britain to be several years behind due to a consuming referendum process.
Britain’s best hope of mitigating its euro-isolation is by working with its EU partners to develop a shared vision for Europe. This must include the baseline of integration for all Member States, distinctly supplemented by integration for the Eurozone members with the option for voluntary participation of non-members where relevant.
It’s in Britain’s interests to have a stable Eurozone, just as it is for it to have a clear understanding of how the euros and non-euros will fit together in the EU. Britain’s problem of the euro will never go away. The UK is already in the minority on the euro question, and the number of non-euro countries is set to fall in the years ahead. All the same, Britain can manage its euro-isolation if it thinks long-term and works for a vision of the EU that takes account of its needs.
Shortened link: britainseurope.uk/20140815
How to cite this article:
Salamone, A (2014) ‘Britain can mitigate its euro-isolation by building a shared vision for Europe’, Britain’s Europe (Ideas on Europe), 15 August 2014, britainseurope.uk/20140815