EMU and Sustainable Integration

Abstract

This paper considers what will be required to make Economic and Monetary Union (EMU) sustainable following the successive crises of recent years. It starts by laying out the policy benchmark, namely the successive ‘President Reports’ produced by EU institutions. It then suggests three dimensions of sustainable integration relevant to EMU, namely the pursuit of sustainable growth, the need to take into account what we call ‘varieties of modernisation’ and the ‘ownership’ of democratically sustainable reforms. It then evaluates the recasting of EMU governance against the benchmark of sustainable integration.

Key Words:

• EMU
• sustainable integration
• sustainable growth
• varieties of modernisation
• ownership of reforms

Acknowledgements

We would like to thank an anonymous referee, seminar participants at earlier presentations in Oxford and London, and, particularly, Paul De Grauwe, Erik Jones, Russell Kinkaid, Benedicta Marzinotto, Waltraud Schelkle and Max Watson, for very valuable comments and discussions. Of course, the usual disclaimer applies.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Negative spillovers were rooted in factors such as unsustainable debt paths, inadequate national financial supervision, the feedback loop between weak banks and over-indebted sovereigns, and lower growth potential associated with insufficient modernization of national economies.

2. The objective of sustainable development was not well integrated in the Lisbon Strategy on growth and employment. The Europe 2020 strategy’s green growth objective is based on climate targets (the 2007–2009 climate energy package), which have become insufficiently ambitious to promote innovation and investment with the crisis-induced downturn in economic activity.

3. De Wilde and Zürn (2012) suggest that crises have a strong bearing on the acceptability of greater politicization in EU integration.

Additional information

Funding

Iain Begg is grateful for financial support under the Horizon 2020 research programme for the FIRSTRUN project, grant agreement number 649261.