This week marks the 60th anniversary of the signature of the Treaties of Rome, which laid the foundation of today’s European Union. The treaties were signed on March 25th, 1957 by the foreign ministers of Belgium, France, Italy, Luxembourg, the Netherlands and West Germany. From resistance pioneers to lawyers, the Founding Fathers of the European project were a diverse group of people who seem to share the same ideals – a peaceful, united and prosperous Europe. To mark the occasion, the Heads of State or Government of the 28 EU member countries and the Presidents of the EU institutions aim on coming together in Rome for a summit hosted by the Italian authorities.
Operating through a hybrid system of supranational and inter-governmental decision-making, the EU has evolved over time into a political and economic union with an internal single market aiming to fuel economic growth and make the life of European businesses and consumers easier by boosting competition and trade, improving efficiency, raising quality and offering more affordable prices. The EU aims to ensure the free movement of people, goods, services and capital within the internal market, enact legislation in justice and home affairs, and maintain common policies on trade, agriculture, fisheries, and regional development.
One of the innovations brought forward by the EU was the creation of the single currency, the euro – a step forward in the integration of the member states’ economies. The focus of setting up the Economic and Monetary Union (EMU), seems to have been nurturing stability and supporting an auspicious environment for growth and employment within the member states. While the effects of the euro appear to be diverse and operating on different scales, from individuals and businesses to whole economies, the benefits are interconnected. For example, economic stability in one member state’s economy may allow its government to better plan for the future by maintaining a climate of financial certainty and encouraging companies to invest. This, in turn, may represent an asset for the citizens by boosting employment and improving the chances of better jobs.
Overall, there seem to be new strengths and opportunities arising from the single currency integration and scale of the euro area economy, making the Single Market more efficient. Doing business in the eurozone appears more cost-effective and may provide improved transparency in transactions. Being able to compare prices relatively easily may sustain and encourage cross-border trade and investment, through individual consumers and businesses searching for the most favourable price for products throughout the euro area. Although many countries in the EU may have become more prosperous, there are differing sentiments, which suggest some European nations are yet to improve in a similar fashion. Knowledge of the youth employment rates and banking fluctuations in Greece and Italy may possibly be due to policy and attitudes regarding political leadership and the Free Market.
The scale of the single currency and the euro area seems to also bring new opportunities in the global economy. A single currency may render the eurozone an attractive region for foreign countries to do business, thus promoting trade and investment. Efficient economic management may confer the euro the qualities of a reserve currency for other countries and offer the euro area a more powerful voice in the global economy. Scale and prudent management may also bring economic stability to the eurozone, making it more resilient when facing external economic changes, such as sudden international economic shifts, worldwide oil price rises or fluctuations on global currency markets. The size and strength of the euro area are closely connected with its capacity to absorb such external changes more efficiently.
A series of concurring factors seem to play leading roles in achieving economic stability and growth in the eurozone, including the sound management of the single currency under the rules of EU treaties and the Stability and Growth Pact(6) – a central element of the EMU. As key mechanism for enhancing the benefits of the single market, trade policy and political co-operation, the euro is an integral part of the economic, social and political structures of today’s European Union and an important factor in ensuring a more cohesive future for Europe.
How may political factors influence the future of the eurozone?