EU Warns Against Isolating Non-Euro Nations As Brexit Vote Looms

  • Dombrovskis says euro-area integration mustn’t create barriers
  • U.K.’s referendum on EU membership takes place in two weeks

Countries outside the euro area mustn’t become second-class members of the European Union, the bloc’s executive branch said, boosting the safeguards Prime Minister David Cameron obtained in his campaign to keep the U.K. in the EU.
As he outlined plans to further weld together the interests of the 19 euro-zone states, European Commission Vice President Valdis Dombrovskis insisted that any moves to deepen monetary union shouldn’t be to the detriment of countries like the U.K. that don’t use the common currency.

Further euro-area integration “should not lead to the creation of new barriers within the EU between countries inside and outside the euro area,” Dombrovskis told an audience at an economy conference on Thursday in Brussels. “We have to uphold the integrity of the common market and the cohesion of the EU as a whole.”

Full Role

With the U.K.’s EU membership referendum exactly two weeks away and the outcome on a knife-edge, the commission’s intervention may bolster Cameron’s campaign because it underscores the guarantees the prime minister wrested from other EU leaders in February. One of those was the promise that, if the U.K. remains in the bloc, non-euro countries will have a full role in shaping financial legislation.

As the U.K. potentially turns it back on the 28-nation bloc and eastern and Nordic countries signal doubts about binding themselves ever more tightly, nations at the EU’s core, such as France and Germany, have been studying ways to deepen integration. EU policy makers in Brussels have long feared the emergence of a “two-speed” Europe that moves ahead with only the most interested governments.

“We have done the necessary crisis management, but the work is not finished,” Dombrovskis said, underlining that current initiatives, such as a common banking framework and plans to help companies reduce reliance on bank financing, must be implemented before the EU can start thinking about more radical steps. They include the establishment of a euro-area finance ministry and a loan facility.

“It should not lead to permanent transfers between countries, nor undermine the incentives for sound fiscal policy-making at the national level,” he said.

Earlier at the same conference, European Central Bank President Mario Draghi called on politicians to accelerate reforms in the euro area, where growth is still sluggish more than six years after Greece obtained its first bailout.

“There are many understandable political reasons to delay structural reform but there are few good economic ones,” he said.

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