Eurozone states should cede more powers to EU institutions, including to a euro area treasury to be set-up in the next 10 years, according to a new report on further integration in the single currency area published on Monday (22 June).

"The world’s second largest economy cannot be managed through rule-based cooperation alone," says the report, drawn up by the heads of the European Commission, the EU Council, Eurogroup, the European Parliament and the European Central Bank (ECB).

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Jeroen Dijsselbloem is both eurogroup president and Dutch finance minister (Photo: Ministerie van Financiën Nederland / Valerie Kuypers)

The eurozone “will need to shift from a system of rules and guidelines for national economic policy-making to a system of further sovereignty sharing within common institutions, most of which already exist and can progressively fulfil this task," it adds.

"In practice, this would require member states to accept increasingly joint decision-making on elements of their respective national budgets and economic policies."

The report, entitled 'Completing Europe's Economic and Monetary Union', comes on the same day that finance ministers and their government leaders of the euro area will meet to debate the Greek debt crisis, amidst renewed fear of a Greek exit from the eurozone.

The report refers to a “common destiny [which] requires solidarity in times of crisis and respect for commonly agreed rules from all members” and that those in the eurozone have given up their national currencies "once and for all".

The financial and economic crisis has “forced national governments and EU institutions to take quick and extraordinary steps”, but “the quick fixes of recent years need to be turned into a lasting, fair and democratically legitimate basis for the future”.

The report contains both medium- and long-term measures.

In the next two years, by 30 June 2017, each country should create a 'competitive authority', “a national body in charge of tracking performance and policies in the field of competitiveness”.

These bodies should be “independent entities with a mandate to ‘assess whether wages are evolving in line with productivity and compare with developments in other euro area countries and in the main comparable trading partners”.

The opinions of the authorities should be used by social partners in wage setting negotiations.

Other measures for the next two years include an advisory European Fiscal Board, completion of the Banking Union, and a reorganisation of the European Semester.

These changes should be possible witin the current EU treaty but other ideas such as eurozone finance ministry by 2025 are likely to require treaty changes.

“Euro area member states would continue to decide on taxation and the allocation of budgetary expenditures according to national preferences and political choices. However, as the euro area evolves towards a genuine EMU, some decisions will increasingly need to be made collectively while ensuring democratic accountability and legitimacy.”

The report also notes that the Eurogroup should have a full-time president. Jeroen Dijsselbloem, the current eurogroup chief, is also Dutch finance minsiter.

The report, which is mostly the work of European Commission president Jean-Claude Juncker, is likely to raise sovereignty concerns in some captials.

However, the report argues that member states have already lost power during the financial crisis but without gaining any democratic oversight.

“At the height of the crisis, far-reaching decisions had often to be taken in a rush, sometimes overnight. In several cases, intergovernmental solutions were chosen to speed up decisions or overcome opposition. Now is the time to review and consolidate our political construct”, the report says.

Some of the report's ideas were voiced earlier this month in an op-ed by the German and French economy ministers.