19 June, 2017
Resolution on Fiscal Union
Adopted by the UEF Federal Committee, 18 June 2017, Madrid

The UEF Federal Committee, meeting in Madrid on 18 June 2017,

considering that

the persistent asymmetry between the Economic and the Monetary Union represents a major risk for the stability of the Eurozone as a whole; and the publication of the reflection Paper of the European Commission on the deepening of the Economic and Monetary Union on the 31 May 2017;

welcomes

the numerous proposals of European and national institutions in favour of establishing a fiscal union in the framework of the Eurozone;

in particular, the adoption by the European Parliament on the 17 February 2017 of the Berès-Böge Report on the creation of a budgetary capacity of the Eurozone;

highlights that

the Berès-Böge Report and the reflection paper of the European Commission provide solid political proposal to start a process of fiscal integration in the framework of the Eurozone on the basis of the existing Treaties, in particular:

  • the Eurozone Member States should adopt a Convergence Code under the ordinary legislative procedure, which shall provide for country-specific recommendations focusing for a five-year period on convergence criteria regarding taxation, labour market, investment, productivity, social cohesion, and public administrative and good governance capacities;
  • the creation of an additional budgetary capacity or a macroeconomic stabilisation function for the Eurozone within the European budget, above the current ceilings of the multiannual financial framework and financed by national contributions or new own resources;
  • the additional budgetary capacity/macroeconomic stabilisation function has the objective to ensure the stability of the Eurozone as a whole; it should not lead to permanent transfers between countries or to transfers in one direction only, it should also not be conceived as a way to equalise incomes between Member States;
  • the additional budgetary capacity/macroeconomic stabilisation function should incentivise or back structural reforms within Member States, by providing resources to those governments experiencing economic downturns and complying with a Convergence Code; the latter shall be adopted under the ordinary legislative procedure and provide for country-specific recommendations;
  • the additional budgetary capacity/macroeconomic stabilisation function should cope with asymmetric shocks by financing an automatic absorption mechanism; the latter could consist either of rainy day fund between participating Member States, following a macroeconomic approach, or a common unemployment insurance scheme, following a microeconomic approach;
  • the additional budgetary capacity/macroeconomic stabilisation function should cope with symmetric shocks by funding strategic investments in the Eurozone as a whole aimed at aggregating demand and foster full employment;
  • the European Commission should be involved in the functioning of the additional budgetary capacity by creating a Finance Minister and a Treasury; the latter shall enforce the existing economic governance framework and optimise the development of the euro area as a whole; The Vicepresident of the Commission in charge of Economic and Financial Affairs will be the Finance Minister of the Eurozone and the chair of the Eurogroup. After a Treaty change, there will also be the possibility for a Treasury to issue Eurozone bonds
  • the setup of an additional budgetary capacity will need to strengthen democratic accountability at Eurozone level; in particular, the European Parliament should review its rules and organisation to ensure the full democratic accountability of the fiscal capacity to MEPs from participating Member States;

stresses that

despite the important developments suggested, the Berès-Böge Report and the Reflection Paper of the European Commission cannot fully deepen the Economic and Monetary Union and lead to the creation of a full fiscal union, which can only be based on a European power of borrowing and of taxation and a genuine European economic policy. The creation of such a power is a necessary condition for the further developments of all the potentialities of the Economic and Monetary Union; it will require to overcome the legal framework provided by the existing Treaties and relaunch the constitutional process between the Member States willing to participate.

Therefore, the UEF Federal Committee calls on

European institutions and national governments to implement the proposals of the Berès-Böge Report and the Commission’s Reflection Paper on the Deepening of the Economic and Monetary Union in the framework of the existing Treaties before the election of the European Parliament in spring 2019;

the Member States of the Eurozone to relaunch the constitutional process in order to establish a full fiscal union through the creation of a federal Treasury and a genuine fiscal sovereignty.


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