Spain calls for deeper euro zone integration, pooled debt

Spain’s conservative government has added its voice to calls for deeper integration in the euro zone, suggesting to Brussels in a paper that members of the bloc should pool some aspects of their debt management and share a budget to fight crisis shocks.

German Chancellor Angela Merkel and France’s new President Emmanuel Macron agreed on Monday to outline a roadmap for deeper European Union integration, and opened the door to changing the bloc’s treaties after meeting in Berlin.

France is also pushing for greater potential cooperation among the 19 countries that use the euro currency, in matters of budget for instance.

The impetus comes after the EU was rocked by Britain’s decision to leave, prompting countries to take positions on how best to shore up unity in the bloc.

Spain’s proposals, which also include a common euro zone unemployment insurance scheme, were submitted to the European Commission in February but came to light this week and were released by the economy ministry on Tuesday.

Spanish conservative Prime Minister Mariano Rajoy has long called for further integration and repeatedly called for steps to complete a euro zone banking union, including by creating a deposit insurance scheme.

His government’s proposals go even further than those Germany and France have proposed, including saying that common debt management was a vital part of any fiscal union.

“Participating member states should allow for a certain degree of debt mutualization,” the paper said. It later added: “The introduction of a euro area Treasury … and the possibility for common debt issuance could also be envisaged.”

The joint Eurobond idea has been shunned by Germany amid concerns it would have to bankroll others, and Macron has said he did not favor mutualizing debt.

Rajoy had already pushed for jointly issued Eurobonds in 2012, at a time when his government was trying to steer Spain through one of its deepest ever recessions and had to request a European bailout for the country’s weakest banks.

Spain, the euro zone’s fourth-largest economy, has since recovered to become one of the fastest-growing in the bloc.

Madrid’s latest proposals also included a common “rainy day fund” for the euro zone that could used to counter shocks and support investment.

Courtesy Reuters