• A
• B
• C
• D
• E
• F
• G
• H
• I
• J
• K
• L
• M
• N
• O
• P
• Q
• R
• S
• T
• U
• V
• W
• X
• Y
• Z

Economic co-ordination

(Photo: EU Commission)

Although the Member States that have adopted the Euro (the Eurozone) share the same currency, much economic policy, in particular tax, spending and budgetary policy, as well as income and wage policy, is not decided jointly, but by the member states’ governments.

The Treaty of Maastricht requires Eurozone governments to conduct their general economic policy in a manner designed to avoid inflation within the zone. Governments that run excessive budget deficits (i.e. spend more than their income) may have fines imposed on them under the Stability and Growth Pact. There have been calls by federalists and others for Eurozone members to establish a fiscal union (i.e. joint control of tax and spending across the Eurozone) in addition to a monetary union.

All sovereign states are both fiscal and monetary unions capable of combining the most optimal mix of economic tools.

Notes

• Some economists are "Monetarists". They believe that the economy should only be controlled through varying the amount of money in circulation.
• The British economist John Maynard Keynes advised expanding the economy (i.e. increasing public spending so as to raise the demand for goods and services) during difficult economic times. This is very difficult to do within the EMU because of the fines imposed for overspending.
• Instead of common economic policies the EU has established voluntary means of economic co-ordination through the so-called Lisbon, Cardiff and Köln processes.

Future

The Economic working group in the Convention on the Future of Europe, led by former EU Parliament President Klaus Hänsch, could not agree to determine common economic and taxation policy by qualified majority.  The Convention proposes common minimum taxes in relation to the common market, but not a common general tax policy.

The EU Constitution has a special Art. I-14 on The Coordination of Economic and Employment Policies. A qualified majority of the member states can adopt measures to ensure coordination of economic policies of the member states. 

Share |