Germany flags fiscal and monetary integration as priorities

German finance minister Olaf Scholz has flagged fiscal and monetary integration as priorities in Europe's next, overdue integration push.

In a far-reaching speech in Berlin’s Humboldt University, Mr Scholz said the European Union remained Germany’s “main national concern” but needed additional sovereignty pooled at European level.

Only then, he said, could Europe shape its destiny by its own rules and ensure that “no one pushes us around”.

“Europe . . . needs to get stronger in order to be taken seriously – by its own citizens as well as by other countries,” he said.

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First on his list of reform priorities: reform of European fiscal affairs to tackle multinational companies who “refuse to make their fair contribution to financing public services”.

Mr Scholz said he was not opposed to tax competition in Europe but favoured an international minimum level of taxation, “to ensure we do not harm each other”. If ongoing discussions at G7, G20 and OECD level did not yield progress by 2020, “we in Europe need to act independently and take the lead”.

“We should agree in December on an EU-wide approach that will put binding rules in place by January 2021,” he said, promising to work closely with France on a financial transaction tax.

Mr Scholz, a senior Social Democrat (SPD) figure, said Europe “urgently” needed a legal framework for a basic social security floor and minimum wages of at least 60 per cent of the national median wage. Only then could freedom of movement be preserved without endangering social cohesion within the bloc.

In addition he called for the euro to be controlled by “democratically legitimised institutions” beyond the ECB, “subject to parliamentary control” and ready to act in a crisis.

Reform debate

After pruning back France’s euro-zone budget proposal, with funds drawn from within the existing EU budget, the finance minister’s speech showed he is anxious to join the reform debate – and step outside the leadership battle inside Angela Merkel’s Christian Democratic Union (CDU).

Differentiating himself from his coalition partners, he made an energetic play for a CDU bugbear: the possibility of allowing national European unemployment insurance schemes help each other out with loans in times of crisis.

Mr Scholz said the proposal had merit because it would ensure crisis-hit countries did not have to increase insurance contributions to meet growing jobless demands when both the economy – and workers – could least afford it.

“We’re not talking about transfer payments even if some people who should know better like to call them that,” he said, with an eye on his CDU coalition partner.

“We are talking about loans. This would send an important signal: the EU is there for its citizens when it comes down to it.”

He was markedly less enthusiastic about EU plans for a common bank deposit guarantee scheme – another neuralgic point in Germany’s EU debate – saying such a programme was the “ultimate destination . . . with a route there that is long and dependent on many factors”.

In his lengthy address, Mr Scholz devoted just two sentences to Brexit, hoping for a “close, if changed, relationship with the UK”.