Trumpeter 4 Europe

   If you were to harbour a secret desire to torture a eurosceptic, there would not be many better ways of fulfilling your fantasy than forcing them to read the speech made by Jean Claude-Trichet 3rd Jun 2011. The European Central Bank Chief, who is on the

verge of retirement, thinks the EU needs a Ministry of Finance. It would not supersede its members' own finance ministries right to decide how to tax their citizens, or how to spend the revenues raised. But it would be charged with keeping a close eye on the

fiscal discipline of member states - up to and including a right of veto to their spending decisions, and other matters of economic policy, should it decide they breached the EU's rules on borrowing. This is the stuff of nightmares for those who worry about the

idea of handing more powers to Brussels and goes well beyond what even the most fully signed up members of the European project in France and Germany have so far agreed. And note that Mr Trichet envisages a Ministry of Finance for the whole Union,

not just members of the single currency - including the UK. Still, Mr Trichet's vision is only the logical consequence of the sovereign debt crisis in the eurozone - and the shocks suffered by all 27 EU member states since the credit crunch. One reason

for the tradegy that is currently playing out in Greece - and the problems we have seen in Portugal and Ireland - is there has been no European ministry of finance with the power to rein in these countries. In joining the euro, they handed over control of

monetary policy to the institution Mr Trichet runs, but retained absolute power over fiscal policy. As a result, they have been able to run up huge debts other members of the eurozone now have little choice but to underwrite. There were, of course, legally

binding treaties that required countries to operate within caps on borrowing as a prportion of GDP. But countries have been allowed to break the rules with impunity - and while there is now agreement that the penalties for doing so must be raised, there is

little consensus on how to do so. Mr Trichet's ministry of finance, then, would be no more than a policeman charged with enforcing the borrowing rules supposedly agreed across the EU. It might have other roles, like taking the lead in the regulation of

European financial services, which would be controversial too, but it would only have to act on its core duty in the event of a member state falling short of its responsibilities. The current crisis must be resolved, but if the euro is to have a future and if non-

euro members wish to continue to benefit from the advantages of the single market, there must be a mechanism for ensuring everyone plays by the rules.

This article first appeared in 'i' newspaper Friday, 3 June 2011 OUTLOOK: David Prosser