The current difficulty in the Eurozone only serves to illustrate that the system lacks credibility because it is a financial union but not a political one. Its ‘strength, paradoxically, is its weakness. The mechanisms required to ensure convergence of members’competitive positions and to resolve crises, underpinning the very survival of the currency itself, depends on its capacity to embed itself into a political union: Without this there is division in terms of policy and an economic undermining of the base of the currency itself, i.e. fine when the sun shines, pain in times of rain. This stems from the fact that economic policies (spending and taxation, social policies, wage policies, etc.) remain ﬁrmly in the hands of the member governments and members do not coordinate such policies.
Any argument for political change in the EU must be predicated by the necessity of some transfer of sovereignty in macroeconomic policies and the organisation of a unified approach between member states. Other factors are equally crucial, such as regulation and auditing of banks and financial institutions to ensure that levels of debt do not leave individual financial institutions facing bailout or bankruptcy. Regulation and a system of building a fund to protect the financial sector from requiring taxpayers’ money will only come when the collective will for stronger political union is accepted by EU member states. We cannot afford to see the EU or the Eurozone fail as it is fanciful to imagine that we would emerge from that unscathed.