Logic points inexorably towards political union



José Manuel Barroso is hardly the first European Commission President to call for a federation of European states. For six decades now the "fathers" of Europe have been making grand speeches about an ever-closer union.

Mr Barroso does, however, have some claim to being the first to really mean it; certainly he is the only one to hold the post when powerful economic forces are pushing that once far-off dream into political reality.

The reason, of course, is what George Osborne calls the "inexorable logic" of the present situation. A monetary union of the kind Europe has endured – one cannot easily say "enjoyed" – for the past decade and a bit has to have a fiscal union to back it; this would probably entail some form of bank supervision across national borders, and, toughest of all, a much tighter political union to set borrowing, tax and public spending levels than was conceivable before the crisis and the Great Recession.

It was the five-year slowdown that destabilised Europe's financial system and its single currency and revealed the strains that can only be dealt with by huge transfers of wealth from solvent nations such as Germany, Finland and the Netherlands to the busted boys of Club Med.

Now, it would seem, institution by institution, politician by politician, the Germans are beginning to get the message that they will have to pay the bills. The constitutional court is the latest to bow to the inevitable.

What the Germans have signed up for – grudgingly and haltingly – is a system of pan-European subsidies where they pay the debts of the profligate economies of the south. For ever. This is not a temporary phenomenon. Unless Greece, Italy, Spain and Portugal become able to pay their way in the world again, that process will be permanent. Moreover, even if they were enthusiastic economic liberals it would take decades to show through – just as the Thatcher-Major reforms only bore full fruit when New Labour came to power.

Mr Barroso knows what this is all about. He was around for the Lisbon Summit in 2000 – a rare triumph for Tony Blair in getting Europe to sign up for a liberal economic agenda – but the project was soon neglected. He also headed a reforming Portuguese government that fell before it could do much good. Now he has to try all this again in a fractious, recessionary Europe. Small wonder he sounds just a little desperate.

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