Does Economic Union Require a Fiscal Union?

This chapter discusses the fiscal policy dimension to European monetary union in the context of the current sovereign debt crisis. It addresses the central question of the extent to which the shift to European monetary union makes the arrival of a European fiscal union inevitable. It then lists several new political and economic challenges for the EU and for individual Member States. This chapter determines that a discreet move towards fiscal union across the Euro area cannot be avoided if the single currency area is to remain whole. It also considers the suggestion that the EU is at a crossroads, in terms of being an international political and economic arrangement.