Ambitious plans to be put before this week’s EU summit – yes indeed, yet another crisis summit – to turn the eurozone into something much closer to a fiscal union make for easy analysis. On almost any level you care to take, they won’t work.
Here’s the plan. In return for debt pooling, Brussels would be given far reaching powers to rewrite national budgets for member states that breach debt and deficit rules.
Under the previously agreed fiscal compact, Brussels already has the powers to vet budgets before they are submitted to national parliaments, but this goes much further, allowing the EU in effect to over-rule national governments and impose its own diktats on member states.
Fiscal sovereignty as we know it would be dead, and I guess large elements of commonly understood democratic accountability too. If countries want to pump prime their economies with unfunded tax cuts or public spending, they won’t be allowed to under this plan.
Just to hammer home the point, if Britain were to agree to such a regime, Labour would in effect become a banned party. It wouldn’t be allowed to do much of what it stands for. The neo-Keynsianism advocated by Ed Balls, the shadow chancellor, as a way of stimulating growth would be outlawed.