Rehn: Eurozone needs deeper integration to survive

Europe’s single currency must be supported by responsible fiscal policies and closer cooperation between countries in the eurozone to survive and prosper, the EU’s top economic official said on Thursday.

“We need a genuine stability culture and a much upgraded common capacity to contain common contagion,» EU Economic and Monetary Affairs Commissioner Olli Rehn told a conference.

“This is the case, at least if we want to avoid a disintegration of the eurozone and instead make the euro succeed,» he said.

But Rehn cautioned that going straight to a discussion of issuing bonds jointly underwritten by all eurozone member states, known as euro bonds, would be a «false debate».

He urged countries first to bring budgetary policies more into line and move towards fiscal union.

“We will not be able to overcome our problems by focusing on a joint issuance of public debt without simultaneous fiscal sustainability, nor will we be able to anchor a stability culture in the eurozone without significantly pooling the burden of adjustment,» Rehn said, in a call for European solidarity.

“Pulling these goals by force (together) is indeed a false debate,» he said.

French President Francois Hollande has spoken in favour of joint euro bonds, but Germany is opposed to them, saying they could only be considered at the end of a process of deeper fiscal and economic integration.