Can we move beyond the Maastricht orthodoxy?


Hungarian EU Commissioner for Employment, Social Affairs and Inclusion László Andor is an isolated figure within the European Commission, a voice in the wilderness. This is what he wrote recently on the website vox, which describes itself as “Research-based policy analysis and commentary from leading economists”.

Today's Eurozone operates in a way that is momentarily advantageous for capital-owners in the surplus countries and creditors at large, but damaging for workers and entrepreneurs, debtors of all types and most users of public services. This column argues that this is unsustainable. The Eurozone must be reformed to avoid the risk that the EU itself could be destroyed by political conflict among the winners and losers. 2014 is a window of opportunity for seriously re-considering the Eurozone's functioning and for moving away from the 'Maastricht orthodoxy'. To recover from stagnation and regain citizens’ trust, Europe needs a genuine paradigm shift on the Eurozone.

The most important reform in Europe today is that of the Economic and Monetary Union (EMU). However, one could get the impression that this reconstruction process has stalled before it even properly started.

A year and a half after the first report of the ‘Four Presidents’ (Van Rompuy 2012), today’s policy debate on the EMU’s deepening appears strikingly modest when compared to Europe’s economic woes and growing fears of a strong result for Eurosceptics and populists in the May 2014 European elections.

With EU unemployment stabilised since the summer at around 26.6 million people, annual EU GDP growth projected at 0.0% and euro zone inflation hovering below 1%, 2013 might be considered the year of pure stagnation. Such an image, however, masks growing divergence in countries’ socio-economic outcomes, particularly inside the Eurozone. The core-periphery gaps in unemployment rates, NEET rates, household income developments, at-risk-of-poverty rates or income inequalities keep widening.

After years of recession and unemployment at unprecedented high levels, it is no surprise that the Eurozone periphery’s growth potential is falling, undermining the entire Union’s growth prospects and lengthening the spell of financial sector deleveraging. But our policy response can easily be perceived as more of the same. A feeling of inertia seems to pervade the EU debate, with observers developing caricatures of an elitist ‘Brussels consensus’ allegedly as firm as it is aloof from the continent’s reality.

Read the rest of Commissioner Andor’s critique of his colleagues’ destructive policies.