This brings me to a wider point about political integration, as raised by economist and author Philippe Legrain: that the last thing the EU needs is ever-closer union. What makes this anti-integration argument so intriguing is that its proponent is pro-European.
Mr Legrain’s argument is that the political integration on offer is of the wrong kind, and thus deserves to be rejected. It is not the Keynesian fiscal union, preferred in France in particular, but the German variety. When the Germans talk about fiscal union, they mean rule enforcement, not macroeconomic stabilisation, eurobonds, deposit insurance or fiscal backstops. I would agree with his overall conclusion — that if this is the kind of integration on offer, it is better simply to say no and stick with the present system.
A good example of why the present system may be preferable to a bad fiscal union is Italy’s 2016 budget. It includes a much higher deficit than would have been the case under a rigid enforcement of the various fiscal rules because the European Commission interprets the rules more flexibly than before. This flexibility allows Italy to accompany its relative weak economic recovery with moderate fiscal expansion, which seems more or less appropriate. Under a German-style fiscal union regime, it would not have been able to do so.
The debate about the future of Europe and the eurozone thus forks out in more than two directions. It is not just about pro or anti, leave or stay, but about the kind and degree of integration we want. There is a multitude of options — and for now no minimalist consensus behind any of them.
Read his FT piece here