France and Germany yesterday joined forces in the European Council as they have rarely done in economic matters with their current leaders, Emmanuel Macron and Olaf Scholz, to revitalize a project that has been stuck for a decade but which now seems essential to tighten the economic gap that separates the EU from the United States and China, the union of capital markets, today fragmented in its 27 countries.
In a geopolitical context of extreme tension, tight budgets and enormous investment needs, the warning launched by Enrico Letta that every year 300,000 million euros in savings of Europeans go to foreign markets – especially the American one , in some cases to buy companies in the EU that fail to grow due to lack of access to capital on a large scale – has made an impact on the big countries, who are calling on the Commission to make proposals to take steps forward in this area.
The conclusions of the summit held yesterday speak of moving forward “without delay”, but the plans provoked the firm rejection of a coalition of 14 small and medium-sized countries who are wary of the implications of the project (harmonization of laws on insolvency and taxation , transfer of financial supervision…), a rejection that managed to lower the scope of the agreements. “We are against any fiscal harmonization. As a small country we do not have many advantages. Offering a competitive tax system is the only thing we have and they can’t take that away from us,” said the Estonian prime minister, the liberal Kaja Kallas, bluntly, in line with what Ireland or Luxembourg defended.
The summit lasted several hours longer than planned to reach agreement on a common text, for which plans for single financial supervision were limited to “systemic actors”, for example. But Scholz made it clear that the EU will not continue to tolerate the aggressive fiscal competition of a few holding back European financial integration. “There has been a time when some have benefited from special regimes in supervision or taxation to take a bigger piece of the pie”, but “this cannot prevent us in Europe from having capital to invest in our companies” .
For Spain, the agreements fall short. “Spain has always defended fiscal harmonisation, and we would have wanted to deepen the union of capital markets”, declared President Pedro Sánchez. “We don’t offer state aid like some big countries, nor do we do tax dumping like others do, that’s why we believe in the single market”.
