The EU has been mysteriously absent from any real role in large policy discussions with the exception of David Cameron’s pledge to stay out of the European single currency. Meanwhile, the German cabinet has approved a massive loan intended to bail-out the ailing Greek government and prevent Greece defaulting on it’s financial obligations. The German move comes as part of a package of loans from other eurozone countries as well as the United Kingdom. In all, the financial aid destined for Greece amounts to 110 million euros with around 20% of that figure coming from Germany.

In order to secure the loans, Greece was forced to adopt wide ranging and deep cutting economic reforms. Greeks will now faces higher taxes as well as higher prices as duty on certain goods such as fuel and luxury items has been raised in addition, VAT has been raised from 21% to 23%. The Greek situation is certain to aid in the push for a greater level of economic governance in Europe championed by France. Germany has opposed moves towards stronger economic government but the damage that was done to the Euro by Greece may well change their mind.

Strict economic governance in Europe will likely be confined to the eurozone for the time being as it is ultimately intended to maintain the Euro’s stability. However, the EU is playing a greater and greater role in the economic affairs of member states. Judgements in the European Court of Justice often find that  some aspects of national tax law, which is currently determined solely by national governments, do not comply with European law. In addition, moves to harmonise VAT across the EU would imply that it is only a matter of time before the economic governance championed by France will manifest itself across the whole of the EU in the form of an EU tax law.

It is interesting then, to ponder the UK election which is primarily being fought on economic questions. It might be wise for UK leaders to pay slightly more attention to happenings in the eurozone as it is entirely possible that the rules imposed on the eurozone will eventually find their way to the rest of the EU.