This is not simply a financial issue. In essence it is a key aspect of the fundamental redistribution of power and resources brought about by the rise of new protagonists in world economy and politics: namely, the BRICS who now exert a powerful pressure on the global energy, raw materials and foodstuffs markets, thereby weakening the dominant position of the West. More precisely, the BRICS can no longer tolerate the present situation in which the US, the EU and Japan seek to perpetuate their domination through increasing debt. The previously dominant world powers are for this reason now obliged to seek to balance their budgets.

The relentless attacks by international speculation on the member states of the Eurozone are caused by the fact that monetary unification was not followed by the creation of a European economic government. Historical experience shows that a single currency cannot work without fiscal and political union. While the US and Japan each have their economic government, the Eurozone does not. This lack of federal sovereignty in the economic sphere as a whole means that the EU is fighting with one arm bound behind its back. It is obvious that the European economy cannot be governed simply by co-operation between member states. To salvage the euro, national sovereignty in the field of tax and spending should therefore be limited. New competences must be transferred to the EU including an increased role for the European Parliament. The decisive structural reform on which the future growth of the European economy depends must be a federal budget. This will be difficult to achieve. It will encounter resistance from national governments, above all from France and Germany, but it is essential if the currency is to survive.

New taxes – such as a Financial Transactions Tax and a Carbon Tax – should be established at European level. These can be collected only at supranational level, consequently flowing directly to the EU, thereby creating a European “own-resources” system and an EU fiscal union. Such resources – together with Project Bonds – should be used to finance a huge growth and sustainable development plan based on investment in research and education, improving transport connections, electricity grids, information and communication networks, renewable energies, and regional policies. A new model of growth, not based on the expansion of consumption but on vanguard technologies, must be the fundamental aim of such initiatives.

This is the only way out of the present financial and economic crisis. Neither debt reduction nor expansion of employment are possible without growth. Austerity, although necessary to salvage the euro and gain trust of markets, is not sufficient in itself. To emerge from the crisis, Europe needs the establishment of a fiscal union able to provide the means needed to promote a sustainable development plan. The “fiscal compact” Treaty the 25 EU member states have subscribed at the end of January 2012 (the UK and the Czech Republic abstaining) totally fails to address the European development plan and the problems of increasing the EU’s own resources.

One of the development plan’s most important goals is expected to be measures to reactivate EU citizens’ support for the European project. At the roots of the increase in Euroscepticism lies the negative perception of the EU as a body that imposes sacrifices, promotes austerity, cuts social expenditure, and generates unemployment. In order to regain citizens' confidence in the European project – and to plug the gap between the EU as perceived by public opinion and the actual work of the European institutions – those institutions must prove themselves able to promote growth and employment and to open the way to a knowledge-based economy.

The break between Britain and the EU following the British veto blocking a revision of the Lisbon Treaty is an historic event that could open the door to progress toward a European federal union. Of course, the choice of an international Treaty to proceed toward fiscal union is the opposite of the federalist way. However, the break with the UK means that to see the EU merely as a market is now dead-killed at Brussels on 9 December 2011. The purpose of reasserting the primacy of politics over markets has prevailed. Three steps in the right direction should be appreciated:
- progress toward a closer European Union can only take place within the Eurozone;
- the principle that the Treaty will enter into force as soon as a majority of twelve member states of the Eurozone has ratified it;
- the declared intention to incorporate the intergovernmental agreement into the Lisbon Treaty not later than five years.

Moreover, these discussions on the regulation of European economy have led to a second break with Britain: namely, the adoption of a Financial Transactions Tax. This is supported by France, Germany and Italy – and nine member states of the Eurozone are ready to start an enhanced co-operation to accelerate work on introducing the tax –, but strongly opposed by Britain which believes such a tax would undermine its competitiveness. The proposal’s popularity in continental Europe stems from the wish to penalize speculation and to compel those whose actions brought about the damaging financial and economic crisis to contribute to repairing the damage. In conclusion, this schism between Britain and the rest of Europe opens the door to further progress towards the goal of a federal Europe in two respects: namely, the acceptance of the majority principle even in the field of treaty ratification, and a recognition of the need for new taxes to fund the EU budget.

In the present stage of the EU’s evolution, a two-speed Europe seems to have become inescapable. It is now clear that the goal of those wishing to strengthen European institutions can only be achieved within the Eurozone. The crisis facing the EU is not only financial and economic. It is also political and institutional and cannot be managed solely by intergovernmental solutions under a Franco-German leadership. What is now necessary is a Eurozone government accountable to the European Parliament. Under the Lisbon Treaty, the European Parliament now has the power to draw up institutional reform proposals which can then be submitted to a Constitutional Convention. In other words, therefore, the European Parliament has the responsibility to design a new institutional architecture for the Eurozone and to regulate the coexistence of the Eurozone within the larger Union. This innovative provision in the Lisbon Treaty regarding the EU’s institutional revision procedures can also be employed to go beyond the Treaty in the direction of a stronger, more democratic and federal Europe.