Updated: Apr 6
By Raphael Dimitriou, Warwick European Society Talk Officer
The Warwick European Society hosted an event dedicated to European integration and how the European Union could transform itself into a political union. We welcomed two incredible academics, Dr. Christian Soegaard – Lecturer in the Department of Economics at the University of Warwick and Dr. Stella Ladi – Associate Professor at Queen Mary University London. In the discussion, the two speakers along with the audience discussed issues related to the role of the European Union in unifying the European continent and influencing the politics in the region.
Event Banner. By the European Society Publicity Officer Natalia Tronina
The two speakers agreed that the European Union needs a permanent albeit limited fiscal union instead of some more temporary measures taken in case of crises like the pandemic or the Ukrainian/Russian Conflict.
Dr. Soegaard mentioned some of the main benefits of a common currency but also some of the issues that may arise from that. Some of the benefits include the lower transaction costs, price transparency, lower exchange rate uncertainty and financial stability. The negatives of having a common currency can include the difficulty of implementing the same monetary policy to the whole of the EU despite the different situations that different countries may be. Moreover, he emphasised in the importance of the OCA criteria to be satisfied, these include the free labour mobility/flexibility, trade openness and business cycle synchronisation. If one of them is not satisfied other insurance mechanisms are needed such as flexible budgets, fiscal integration and financial integration. In addition, he mentioned that there is no fiscal integration in the Union, no focus on financial stability while the Eurozone is relying on bank finance rather than market finance. He also highlighted the importance of fiscal union, since it is necessary for the survival of the EU. One step towards that direction is the Next Generation EU, however this is only an ad hoc measure, while a more permanent policy is needed.
Dr. Ladi stressed the role of the European Union in stabilizing the economy in the region after Covid-19. She mentioned that the pandemic was a hard hit for the European economies and societies while having an asymmetric impact on member states despite the symmetric nature of the shock. She also argued that the pandemic could act as a window of opportunity for fundamental change in the EU’s economic governance. The symmetrical nature of the crisis meant that moral hazard arguments were doomed and a failure to react could have led to EU disintegration. She mentioned that even though in the beginning there was single-loop learning from the Eurozone crisis, by spring 2020 a double-loop learning occurred that was enabling the redistribution of resources. However, negotiations were not easy between the countries and the recovery strategy is still at the very early stages to judge whether this will be successful or not. She concluded that crises could provide fertile ground for change, but change is not inevitable, what matters is the nature of each crisis and the past experience that each country has. She highlighted, in the end, that a historic decision has been taken where all national parliaments within the EU have given the go ahead and national plans have been submitted, however, whether economic governance will become permanent and whether the RRF will lead to economic growth and trust in the EU will be shown in the near future.
In the end, the audience had the opportunity to engage in a Q&A session with the speakers and answer some questions that were not addressed during the talk.
As, Warwick European Society we are glad to see that the EU is moving towards a multidimensional integration that includes economics, finance and politics.