On Tuesday 26 September, French president Emmanuel Macron presented his “initiative for a sovereign, united and democratic Europe” at the university Sorbonne in Paris. The speech details several important policy proposals on the banking union and EMU, security, migration control, asylum, energy transition and digitisation.
One of the main messages was to advance integration between those who are willing.
Banking union and economic and monetary union
Macron stated that a common financial transaction tax (FTT) had failed because it would penalise one country more than others. Two countries currently have an FTT: France and the UK (stamp duty, not related to the EU proposal). He agreed that it should not be too high to discourage business, but that the UK stamp duty should be taken as a model for a European FTT. This would not endanger the competitiveness of certain economies, and should be based on a simple scheme with a large tax base.
He would be prepared to funnel the proceeds from the tax towards development aid.
He also wants to tax multinational companies in the country where the added value is actually produced. He suggested a rethinking of tax systems in the digital field (taxation of digital companies) and regulating the major platforms.
In order to reduce youth unemployment and for the Eurozone to become an economic powerhouse able to compete with China and the USA, Europe needs convergence and stability through national reforms. Macron mentioned labour market reforms, professional training and the financing of the economy, but also by coordinating European economic policies and a common budget. A common Eurozone budget was essential to face economic shocks for countries which could not control their monetary policy anymore.
He added that he “did not have red lines, only horizons.”
The budget could be financed by European taxes on digital businesses or environmental taxes and could be used for common expenses. On the other hand, this solidarity has to be balanced by essential reforms and by a dedicated minister combined with control by the European Parliament.
He suggested a common tax base for businesses in Germany and France within the next four years. A bracket of taxation levels should be agreed between all EU member states by 2020 and adherence would condition access to the European cohesion funds.
Macron suggested a European minimum wage, which would nevertheless be adapted to each member state’s specific circumstances.
Other policy proposals
He proposed the creation of a common intervention force, a common defence budget and a European intelligence academy.
He called for a common asylum office, which would harmonise procedures, the establishment of a common border police, and for a vast programme of integration and training of refugees.
He advocated that all European students should speak two languages, and that university cooperation should increase.
Among other things, he put forward the idea that the 73 seats of British MEPs should in future be elected on the basis of transnational lists.
He proposed to reduce the size of the European commission.
Prospects
His proposals are founded on renewed and intense cooperation with Germany. However, the federal elections on Sunday 25 September have significantly weakened the CDU and Merkel. The FDP has very different ideas on European monetary integration.
15 renowned French and German economists have penned a letter broadly supporting Macron’s plans for the strengthening of the banking union, and even going beyond in certain areas.
The letter states that
“it will become even more important to facilitate euro-area risk-sharing through non-fiscal and non-monetary instruments. This will require a discussion on how to resolve the continuing deadlock on European deposit insurance, and how to promote capital market integration, which is underdeveloped in the euro area, particularly compared to the United States.”
They plead for regulatory curbs on the continued exposure of banks to their national sovereigns and consider whether a discussion on European safe assets should be held.
The economists argue that
“Finally, and most importantly, French and German officials will need to take a leap of faith away from their traditional positions--while insisting that the legitimate concerns that motivate these positions are addressed.”