Forget disintegration: The EU hard core is on track for a United States of Europe

 
Graeme Leach
A giant 150 square meter European flag f
It may be missing a few stars, but an existential crisis could prompt the ultimate integration (Source: Getty)

Prior to the referendum result, I thought the EU was at a fork in the road, facing two difficult ways forward: either a gradual fading away, or an existential crisis. Following the referendum, the weight of argument for both has increased.

The fading away argument has a number of components. First, the number of member countries reduces further over the coming decade. Second, a lower EU share of global output (due to fewer countries) would be compounded by poor GDP growth performance relative to the rest of the world. Third, there would be a reversal in the shift of activity, away from supranational authority and back towards the nation state.

But I always had doubts about this theory. Not because it was too pessimistic – quite the opposite. I think the EU could face an existential crisis over the coming decade, but then matters could get very interesting. In my view, the outcome wouldn’t be the complete disintegration of the EU. Far from it. There could well be a reduction in the number of countries in the EU, but there is also a real possibility that, for a “hard” core of countries, the existential crisis will trigger a big bang shift towards “more Europe”. In other words, the existential crisis won’t be the end of the idea of a united Europe, but the beginning of an actual United States of Europe in the late 2020s.

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The idea that disintegration could lead to the ultimate integration runs counter to received wisdom. The conventional thinking is that the process of EU integration has run into the sand. This is said to be the result of three powerful forces: the populist backlash following the migrant crisis; the low probability of coming to any agreement on fiscal union, due to German resistance to any form of debt mutualisation or supranational redistributive fiscal policy, and peripheral country opposition to austerity measures; the Brexit vote in the UK and the risk that it could trigger a domino effect of further referenda in other EU countries. The latter argument suggests the EU needs to lie low for a few years until the political and economic environment is more conducive to ideas of deeper integration.

I agree with the conventional wisdom in the near term, but question it thereafter. My point of departure with conventional thinking is that, while the current spate of EU crises is the worst in its history, it is not, as yet, existential. But that time will come.

How might that time come? First, there could be a domino effect in other EU countries over the coming years. Second, there is likely to be a return of the euro crisis in some form. Third, by the 2020s, we are likely to see the beginning of the next EU crisis, this time related to the demographic Sword of Damocles hanging over the continent.

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There are only so many fundamental crises an institution can handle. Faced with what appear to be insurmountable challenges, the old maxim that whatever the problem, the solution is more Europe, will ultimately come of age. Out of the ashes of disintegration could rise the Phoenix of the United States of Europe.

The passion and belief that has underpinned the European project and ever-closer union has not gone away. It underpins a worldview that sees the future as the end of the nation state. Such beliefs will not be given up easily.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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