A Euro finance minister concept is a perilous utopia

Having interviewed many of Europe’s finance ministers, Exante’s Patrick J O’ Brien thinks that the possibility of a Euro finance minister brings little added value to Europe

(First left) Malta’s Finance Minister Prof Edward Scicluna at the Eurogroup meeting, convened on the eve of the Economic and Financial Affairs Council (ECOFIN) in Brussels
(First left) Malta’s Finance Minister Prof Edward Scicluna at the Eurogroup meeting, convened on the eve of the Economic and Financial Affairs Council (ECOFIN) in Brussels

French President Emmanuel Macron and EU Commission President Jean-Claude Juncker would like to see the position of a common European finance minister created, with the French President arguing that the role should include supervision of a common Eurozone budget.

The Commission last year presented ideas for a European minister of economy and finance to EU leaders. The new role would simultaneously be a vice-president of the European Commission and head of the Eurogroup. Above all, supporters of the idea argue that the new EU finance minister should not mix national with European interests but should ensure investment across Europe at the same time as guaranteeing “budget discipline”.   

According to the commission’s job description, the European minister of economy and finance would be a European commissioner but would also chair the monthly meetings of eurozone finance ministers, the body that took many of the critical decisions during the eurozone crisis. The job could be created as soon as November 2019, when a new European commission takes office

Creating the office of “Euro Minister of Economy and Finance” will not be able to solve the main problems facing fiscal coordination in Europe. The creation of a European finance minister should by no means be a priority in Eurozone reform. They run the considerable risk of creating a new, impressive title with no actual substance. This could ultimately end up doing further damage to the reputation of the Eurozone.

Some argue that a EU finance minister might increase democratic accountability. The Eurogroup has been meeting for 20 years to informally agree policy. There are hardly any rules at these meetings, which is of course something seized upon by eurosceptics, who argue that the fate of countries like Spain and Greece are being decided behind closed doors. Having a single EU Finance Minister would create a clear point of contact for affected countries.

He or she would then also be responsible for a European Monetary Fund, which, like the International Monetary Fund, should be able to help crisis countries.  Creating a finance minister for the EU rather than for the Eurozone is a clear attempt to prevent divisions among the 27 countries that will remain in the EU once Britain leaves in 2019.

Instead of creating an ill-designed European finance minister role, the European Commission should therefore propose to make the Eurogroup president a full-time position with a clear European mandate. A full-time president should defend European interests in the gathering of national ministers. Moreover, she would be the person defending jointly-taken decisions in national contexts such as national parliamentary debates. Finally, such a full-time president should regularly report and explain Eurogroup decisions to the European Parliament – perhaps back-to-back with the President of the European Central Bank, for example

Brussels should move away from creating an institutionally and politically ill-conceived finance minister position and focus its energy on reforming the EU budget to make it more useful for its citizens. If the EU is serious about improving fiscal governance of the eurozone, beefing up the chairmanship of the Eurogroup and establishing greater accountability to the European Parliament will be far more effective.

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