Five Presidents’ Report on the completion of European Economic and Monetary Union

Economic and fiscal policy coordination within the EMU must be further deepened and rendered more binding.

What is at stake?

European Economic and Monetary Union (EMU) has insufficient mechanisms for stabilising the economic development of the Member States. The European Parliament estimates that non-integrated capital markets and negative fiscal policy contagion eff ects cost the overall economy € 28 billion a year.

Priorities of German Business

Integration in the Eurozone should be markedly deepened in areas which strengthen the EMU stability and competitiveness. Structural reforms on labour and capital markets are in first position on the list of priorities. Simultaneously, they help the Member States to converge.

Consolidation of national budgets is indispensable to restore the ability of the Member States to manoeuvre. The European Semester must be applied determinedly and the country-specific recommendations must be implemented consistently. Macro economic imbalances should be addressed with determination.

Strengthening the Single Market and above all deepening labour and capital markets are central to increase the European Union’s crisis resistance. The Capital Markets Union and Energy Union as well as the Digital Single Market are steps in the right direction.

In the long term, EMU needs stronger fiscal integration which follows clear rules and does not reduce incentives for structural reforms.

Further integration and strengthening of the single market is necessary

Extent of stabilisation of a national economic downturn via various channels, in %

Source: IMF, 2013

Only 34 percent of a national economic downturn is cushioned in the Eurozone. In the USA, the comparable figure is 75 percent. Hence, the contagion effects in the Eurozone are considerable.

Stabilisation through the mobility of labour and capital functions in EMU far less well than in the USA. A deepening and better integrationof the Single Market is urgently necessary.