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Wake-up call for the EU after Brexit: expert group calls for reform of the euro

Reforms and a deepening of European economic and monetary union are vital for the future of the EU. If the euro fails, the entire European project is at risk. These are the key findings of the report “Repair and prepare: growth and the euro after Brexit”, which is being presented by a group of international experts in Berlin today.

The group is led by Henrik Enderlein, Director of the Jacques Delors Institute in Berlin and Professor at the Hertie School of Governance, and Enrico Letta, President of the Jacques Delors Institute in Paris and former Italian Prime Minister. The report was produced in cooperation between the Jacques Delors Institutes in Berlin and Paris and the Bertelsmann Stiftung.

Euro reforms unpopular but important – “Doubts surrounding the future of the euro are slowing growth down. The Brexit vote has brought new uncertainties into play. A reform of the euro might be an unpopular move in the world of politics right now, but it is vital. Draghi’s ECB actions saved the Euro, but now it is up to the governments to do their job,” says Enrico Letta. Henrik Enderlein adds: “The euro is vulnerable and urgently needs to be reformed, otherwise it won’t survive the next crisis. We don’t know whether the next crisis will hit in six weeks, six months or six years. But we need to take action now.” Enderlein continued: “Given that there is no federal solution in sight, we should opt for an intergovernmental approach – possibly followed by deeper integration in the future.”

Experts call for deepening of economic and monetary union – The recommendations are based on their conviction that only an overhaul of the euro and the existing crisis mechanisms can guarantee the long-term survival of the EU. The report puts forward a three-step plan to reform economic and monetary union:

1. A first-aid kit for monetary union that addresses shortcomings in crisis management and economic coordination.

2. Growth in the EU has to be strengthened by a combination of investments and reforms.

3. In the medium term, the euro has to be based on a large degree of risk sharing and sovereignty sharing. This goes hand in hand with developing the permanent European rescue mechanism, the ESM, into a European Monetary Fund under greater parliamentary control.

Even though the EU currently faces challenges in many areas, including Brexit and the refugee crisis, the authors of the report underline the urgency of the euro reforms. The Chairman of the Bertelsmann Stiftung and co-author of the report, Aart De Geus, clarifies: “We cannot shy away from changes. We must reform the eurozone today if we want the next generation to live in a unified and strong Europe tomorrow.”

The report was prepared in cooperation between the Jacques Delors Institut – Berlin, the Jacques Delors Institute in Paris and the Bertelsmann Stiftung, and supported by the research project “Repair and prepare: strengthen the euro” of the Bertelsmann Stiftung and the Jacques Delors Institut –Berlin.

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