The sudden and untimely death of Tommaso Padoa-Schioppa, just before Christmas, robs Europe one it’s most articulate and lucid voices. The former Minister of Finance in the Prodi government, and one of the architects of monetary union, was a shrewd commentator of the European scene. Writing in December for Notre Europe, the Paris think tank, founded by Jacques Delors, which he chaired, he talked of ‘the hurricane which had attacked the sovereign debt of the Euroland economies’ having as its real target the euro, rather than the debt of particular member states.
In his view the best means of defending the Euro was attack; complete the reform of economic governance, pursue fiscal union, seize on the review of the own resources system this year with new sources of finance for the EU’s budget from taxing financial transactions and carbon emissions; and finance Europe-wide infrastructure improvements by Eurobonds.
He was deeply critical of the pursuit of austerity as an end in itself. Responsible public finances needed in his view to go hand-in-hand with strong measures to combat unemployment, and harnessing the catalytic effect of the EU budget to this effect.
Such thinking is of course anathema to orthodox leaderships in Berlin, London and many national capitals. And it may be too heady a brew for the European Commission which has been reluctant to show leadership ever since the financial crisis broke in the autumn of 2008.
But the truth of the matter is that the political authorities in the member states and in Brussels have consistently underestimated the nature and scale of the challenge to Europe’s economic sovereignty posed by the crisis. At every stage the European Council, EcoFin and the Commission have been behind the curve. Measures taken in May, October and December 2010 might have stemmed the crisis had they each been taken two, three or six months earlier. But the consistent delay and sometimes the quality of the decisions has rarely provided more than a brief respite before the next onslaught from the speculators. Continue reading Guest blog from Julian Priestley: ‘Europe must step up in 2011’