The Eurozone’s Path to a Federalist Future

The author argues that the future of European monetary union is and can only be a federalist one. To survive and prosper, the Eurozone needs to become a single economy based on a banking union; a fiscal union with an enhanced central budget; and a political union to facilitate and legitimize central decision-making.

The author does not believe that the euro’s survival is any longer in doubt. He does however see threats in the short term to its stability arising from problems of debt sustainability in some countries of the Eurozone and populist hostility in these countries to necessary economic reforms. To counter these threats Eurozone governments must place less emphasis on economic austerity as an apparent end in itself and do more to promote economic growth in the Eurozone as a whole; at the same time they must target more carefully and apply more flexibly the conditions imposed on national governments receiving financial help from their partners in the Eurozone.

The establishment of banking, fiscal and political union within the Eurozone will have, argues Lamond, a highly important political consequence for the United Kingdom. The federalist future of the Eurozone will increasingly come to be seen as the future of the European Union as a whole. In the medium term, the United Kingdom will need to decide whether it wishes to be part of this European federalist future or not.