Is the current trend towards re-nationalization in the European Union an “accident on the road” or a development that will prevail? Thomas Wieser, President of the Eurogroup Working Group and of the Economic and Financial Committee of the European Union stated at a SAFE Policy Lecture on 30 May that the EU may have come to a turning point in post-war history. Brexit and increasing populism in Europe indicated a threatening rescission of established structures for cooperation. According to Wieser, a re-nationalization in financial regulation may have serious consequences for the European integration process as a whole. As a consequence, markets would become more segmented and competition would decrease which could lead to a competitive currency devaluation. “In the end, trade agreements and the political union itself could be questioned,” Wieser warned.
However, it would be rather naïve to speed up European integration in order to fight growing populism and nationalism, Wieser said. “In principle, more integration is the right thing to do, but it is also dangerous because of the current anti-European atmosphere.” Instead, the trained economist suggested to establish more democratic legitimacy of European institutions. National parliaments had lost their interest in EU integration, because all EU-related decisions were now taken by the European Parliament. Moreover, a large part of the population felt that they did not benefit from globalized markets. “There has been no compensation from the winners for the losers of globalization,” Wieser claimed. He called for a new architecture in the EU. “Continuing like in the past is not an option.”
Wieser does not believe that a fiscal union will become reality in his lifetime: “We will make progress on a variety of practical issues, but the breakthrough is not for this generation.” The Austrian takes an optimistic view on the German-French tandem: “It has a good chance to move things forward,” he said. However, Germany would need to engage in more risk sharing with its European partners, he claimed.