‘Now or never’ for Europe, French think tank warns

The leaders of France and Germany must use the window of opportunity that opens up after elections in both countries to inject new momentum into their single currency project or risk its failure, a leading French think tank warned on Monday.

In a 77-page report entitled “The Europe We Need”, the Institut Montaigne, an independent institute with links to French presidential candidates Emmanuel Macron and Francois Fillon, called for a “multi-speed” Europe in which the euro zone presses ahead with its own budget and even a prime minister.

The report, the product of months of consultation between leading figures from European business, politics and banking, could serve as a blueprint for use by a new French president.

Polls suggest Macron, a pro-European former banker, will face Marine Le Pen, the anti-EU leader of the far-right National Front, in a second round run-off on May 7th, and beat her.

“We are in a geopolitical environment that is extremely dangerous for Europeans,” Ramon Fernandez, finance and strategy chief at French mobile phone group Orange and head of the working group that produced the report, told Reuters.

“If our leaders are to shape the future of Europe and give it back its momentum, it may be now or never. This political will is absolutely necessary. The year 2017 will be decisive,” said Fernandez, a former head of the French Treasury.

The German election will be held four months after the French vote. Conservative Angela Merkel is expected to face a tough challenge from Social Democrat Martin Schulz, the former president of the European Parliament.

In focussing on the need for France and Germany to lead, the report echoes what Macron has said on the campaign trail.

It also calls for Europe’s rescue fund, the European Stability Mechanism, to be turned into a full-fledged monetary fund as well as tougher European defences against foreign companies and cross-border mergers to create European champions.

In foreign policy, it stresses the need for good relations with Britain and the United States, despite Brexit and the election of U.S. President Donald Trump. It recommends offering Turkey an alternative to EU membership, saying the political evolution of the country makes joining the bloc impossible.

Above all it stresses the importance of the euro zone and smaller groups of countries pressing ahead with closer integration, a similar message to the one sent on Saturday at a summit of 27 EU leaders to mark the 60th anniversary of the bloc’s founding Rome Treaty.

The report calls for an “executive” for the currency bloc in the form of a prime minister or finance minister, who would be answerable to a euro zone subsection of the European Parliament.

“The first priority is the euro zone. We need to shore up the edifice and complete the process that was started with the creation of the single currency,” said Fernandez. “The euro zone is the heart. We need to irrigate it better.”

Reuters

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell