By: DailyForex.com
The position of the UK on EU membership has always focussed more on the idea of the “Common Market” (as it used to be known) affording the UK freer trade with European partners. The UK has always been lukewarm, at best, on moves towards pan-European social rights, legal conventions and “Norms” since these are on the periphery of perceived UK interests. Even accords such as the Schengen agreement which swept away internal passport controls within signatory countries and greatly facilitates movement were spurned by the British.
However, the economic logic of a broadly Federal Europe over the long-run is inescapable. The Euro was a natural consequence of the desire to facilitate trade within the EU and the woes it has suffered since the Greek debacle just serve to underline the importance of establishing an underlying Federal structure to the club.
The Germans were keen to see external control over sovereign budgets where the circumstances demand and wanted this in place before banking supervision was agreed. In the event, they did not press the case. ECB President, Mario Draghi, has thrown his weight behind the concept of a “Super-Commissioner” who would have veto powers over sovereign budgets. Such powers are currently vested in the EU competition Commissioner. It is also a natural consequence of the accord of 25 of the 27 EU member states designed to implement tighter fiscal control over deficits and closer fiscal unity agreed towards the end of last year (only the Czech Republic and the UK declined to sign up). "If we want to re-establish trust in the eurozone, countries must pass a part of their sovereignty to the European level," said Mr Draghi.
Ultimately, business and market confidence in the Euro must be fully restored to ensure the economic success of the Eurozone. Closer ties between Eurozone countries are going to be an inevitable consequence of this, with certain budgetary authority passed to a central body.