Giving up currency sovereignty means losing national sovereignty.
A majority of European leaders hashed out a deal on a new intergovernmental treaty that will strengthen fiscal integration, requiring member states to surrender some degree of sovereignty to a central European authority. It is a plan clearly based upon proposals from the eurozone's biggest and most powerful members, Germany and France.The market mistakes a death knell for a victory march.
Governments participating in the new treaty agreed to have balanced budgets, calculated as an annual "structural" deficit of no greater than 0.5% of gross domestic product. During economic slumps, when tax receipts fall and spending may rise to stimulate growth, governments will be allowed to temporarily run slightly higher deficits, of up to 3%.Still no common fiscal authority contemplated. Without it, the EZ faces permanent austerity and consequent deflationary pressure, lagging demand, and high unemployment in the name of controlling inflation, or else trying to negotiate unsustainable debt levels.
UK is alone gets what's really at stake in currency sovereignty.
"We're not in the euro and I'm glad we're not in the euro," said Cameron to reporters early Friday morning. "We're never going to join the euro and we're never going to give up this kind of sovereignty that these countries are having to give up."That's about the only savvy thing that Cameron has said since taking office.
It's not even a done deal for Europe.
"The first question is, is it legal on a European level? Is it breaching European law? Because if that were the case you can forget about the whole thing," said Van Roosebeke. "If it's not breaching European law then you have to ask yourself the question in every single country, is this compatible with my national constitution?"
Analysts say the prospect of clearing national legal hurdles strikes fear in the hearts of Europe's staunchest advocates. Some of the 23 member states that agreed to strict European oversight will have to hold referendums at home, allowing their citizens to have the final say.
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By Mark Latham and Sumi Somaskanda, Special for USA TODAY