When Europe needs a new ‘fiscal union’
In a year of turmoil, the European Union faces a choice.
Should it be left with its own version of the old “grand bargain” or is there room for an alternative?
In a month, the question is a big one.
The euro has been at its worst since the collapse of communism in 1989.
A crisis in Spain, Greece, Portugal and the Baltics has shaken the euro zone, but the euro remains the world’s currency.
What is at stake is not just the survival of the euro, but also the survival and future of the EU as a global institution.
Europe has lost confidence in its ability to address global economic challenges and the ability of countries to cooperate and achieve shared goals.
This has prompted the EU to look to the United States, Canada and other emerging markets for its solutions.
In the past year, the US and Canada have joined the Eurozone in creating the European Investment Bank (EIB), the World Trade Organisation (WTO), the European Central Bank and the European Commission, and a new EU-Canada partnership for the Transatlantic Trade and Investment Partnership (TTIP).
These three institutions have helped stabilise the EU and have created a common platform for trade.
The US and the EU are working to reduce the trade deficit between them by 30 per cent over the next decade.
They are also working on a free trade agreement that would boost US exports and increase EU exports.
The EU has invested heavily in the internet, education, infrastructure and energy sectors, and is considering setting up a new commission to promote economic cooperation.
The UK is working to negotiate a trade deal with the EU.
The United States is pushing for a strong and stable EU.
It has invested in the EU’s digital infrastructure, and it has invested massively in the Single Market.
But these efforts have been overshadowed by the EUs own political crisis and by a wave of populism.
The political instability in the UK and the US has given rise to far-right, nationalist and xenophobic political parties.
This new generation of populist parties are pushing for anti-immigrant, anti-EU policies.
The US and Europe are united in a belief that there is a “Europe of the future” that is better equipped to tackle global economic issues.
But there are other areas where they disagree, including the importance of the single market and the role of the European Court of Justice.
EU countries have had to take more time to find consensus on the future of trade and finance in the wake of the financial crisis and the Brexit vote.
The eurozone crisis has not yet been fully resolved, and the economic challenges are continuing to deepen.
The future of an EU-US trade and financial association is complicated and difficult.
It is a subject that is likely to become more important as the new year approaches.
The author is a research fellow at the Centre for European Reform