Reshaping economic and monetary union. Membership rules and budget policies in Germany, France and Spain

Abstract:

EMU - Economic and Monetary Union - might well be an economic concept but it was and remains essentially a political construct. This work explores that political construct and subsequent reshaping of monetary union which is relevant to continuing discussions on the future direction of EMU and its role within a fully fledged economic government of the EU alongside the European Central Bank.

The book is organised over six chapters. The opening chapter deals with the birth pangs of EMU manifest in membership criteria, the extent to which these criteria should remain as permanent restrictions on Member States’ economic policies, the contradictions between employment policies and price stability, disputes over delays in the final stage of monetary union and the confrontations that arose in the election of an ECB president. The following three chapters are country specific and look at the politics of central bank independence and budget retrenchment. Chapter two examines the German experience and its strong allegiance to ECB independence and stability-oriented policies. The French story is told in chapter three which comments upon the French enthusiasm for the European Central Bank, which was largely seen as a move to protect the EU’s weaker economies, and the lack of political will to take the tough decisions surrounding budget deficits and growing unemployment in the face of massive resistance by organised labour. Spain was fearful of being left in the wilderness with the probability of losing out on inward investment which weighed heavily against the constraints on inflation and budget deficit. These and other aspects of Spain’s EMU involvement are covered in chapter four. Negotiations over the terms of monetary union and the structure of the European Central Bank are examined in chapter five which also looks at the influence of voter opinion. Chapter six draws comparisons between the country specific experiences and the model presented in chapter one, and concludes with comments upon the influence of voter opinion and institutional actors on government attitudes toward a European Central Bank.

The work will interest students and specialists of international political economy and European Studies, and all those interested in the effects of joining EMU.

Shawn Donnelly is Assistant Professor in Political Science at the University of Bremen.