What is the future of the European Union? What are the European economies’ recovery prospects? How will the capital markets, interest rates and the currently strong euro evolve in the future? In the past few days, the above questions have taken on an added urgency among European financial circles. For this is the year that the ratification process for the European Constitution will take place. Several countries will use referenda. So, what will happen if the European Constitution, which requires unanimous ratification from the 25 EU member states, is rejected? There is no certain answer at present but the cause of a unified Europe and the possibility of a truly integrated economic governance (that is, the ability by the EU to make decisions on economic policy, bypassing national bodies and mechanisms) will be definitely set back, with certain negative effects on markets, interest rates and the single currency. That is why all economic players support the ratification of the Constitution but do not exclude negative developments. In Brussels, they say that the public debate initiated by former French President Valery Giscard d’ Estaing, head of the assembly which drafted the Constitution, has contributed to the formation of a deeper European consciousness and has improved the ratification prospects. But, these circles repeat, one can never be certain about Britain. If the Constitution is rejected, the first repercussion will be a general disruption of the EU’s political functions, for a protracted period at least. This will spread doubt about the ability to implement an integrated economic policy aimed at enhancing competitiveness and entrepreneurship (the so-called Lisbon Agenda). The effects on the currency would follow. These events would also be a blow to the chances of European economic recovery, at least in the foreseeable future. The positive element in this climate of uncertainty is that low growth in eurozone economies has already alerted the policy-making bodies toward more forceful implementation of the economic reforms that will help implement the Lisbon Agenda and will pull the European economies out of their present quagmire. Luxembourg Prime Minister Jean-Claude Juncker, who, apart from his role in holding the six-month rotating EU presidency is also chairman of the Eurogroup, recently said that he will try hard to achieve an agreement on labor market reforms, privatization, research and technology and increased investment in education and training. The European Commission’s Portuguese president, Jose Durao Barroso, on Thursday instructed Commissioner for Enterprise and Industry Guenter Verheugen to present proposals on boosting competitiveness, entrepreneurship and employment. These proposals must be submitted by February 19 and all commissioners will work toward their implementation. Barroso has identified nine problem areas as ripe for reform: a lack of flexibility in labor markets; insufficient training of the labor force; the crisis of the social security system; weaknesses in the research sector; delays in implementing the information society; delays in technology investment; the stagnation of market integration in sectors such as energy; a lack of sufficient trade competition at European level and bureaucratic obstacles to entrepreneurship. Overcoming these would kick-start the Lisbon Agenda and would breath new life to the cause of a unified Europe by aiding in economic recovery.