French economy minister calls for fiscal union

Emmanuel Macron, France’s economy minister, has called for Europe to instigate new measures that would bring further economic unity between Euro Zone members.

Macron argued that continuously engaging in the Euro Zone’s current status quo will only lead to the Euro currency’s self-destruction. Fiscal transfers between member states are therefore necessary in stabilizing the overall Euro Zone economy.

However, the vision of having a unified fiscal policy is often met with considerable resistance. To many nations, surrendering their own independent fiscal policies in return for a more continental-wide authority is almost equivalent to relinquishing the entirety of their economic sovereignty. To the largest, more powerful nations of the Euro Zone, such as Germany, a unified fiscal policy would add to the burdening responsibility of safeguarding the credit and spending within smaller nations.

However, Macron argues that fiscal transfers are essential if the currency union is to survive future economic movements. Indicating how the current monetary union cannot continue to exist without a complimentary fiscal union, Macron stated “If the member states are not ready, as has been the case thus far, for any form of financial transfer in the currency union, we can forget the euro and the euro zone,”

“A currency union without financial equalisation - that's impossible! The strong must help”
In an announcement to advocate France’s vision for a fully-fledged European economic government, Macron called upon a new Euro commissioner to be seated in Brussels. It is here where the commissioner would be able to coordinate the economic, financial and social policies of the Euro Zone member, effectively making the Belgian city the economic capital of Europe.

Macron illustrated, “The euro-government would be led by a commissioner with wide-ranging powers.” Specifically, Macron suggested that the commissioner would have the means to conduct state-funded investments whilst also setting the tax policies through fiscal unity.

Currently, the member states of the Euro Zone have surrendered their monetary policies to the European Central Bank (ECB). Through this unified policy, members of the Euro Zone are able to be issued credit on ECB set interest rates, allowing smaller nations, such as Greece, to engage in considerable levels of deficit spending.

There exists an argument that indicates how there is little restriction on the credit attainment of these smaller nations, addressing the risk involved when determining how such loans can be returned. Having a unified fiscal policy could help implement stronger restrictions on deficit as member nations would rely more on income revenues for their spending capital.