"In general I always think you have your finger right on the pulse. But I do have to take issue with your frequently stated opinion that the EU is moving in the direction of fiscal union.

"In both the UK, where you live, and Denmark, where I live, I find it inconceivable that there could be any major restructuring of the tax system in order to accommodate some notion of EU unity in this area. In the UK the government always does pretty much what it likes, based on the ideological direction of the party currently in power, with little deference to other opinions. Here we have the opposite situation, with minority coalitions, where every incremental move is discussed ad nauseam, and each party's views on every issue get a lot of hearing.

"But in neither country have I ever heard it mentioned that there could be any significant change in the tax structure. The concept that Scandinavians would be willing to have much lower taxes and much reduced social welfare to fit into some pan European model I find very far-fetched indeed. If something in Europe is reassuring the markets that things are moving in the right direction, it surely cannot be the idea that fiscal union is on the way.

"Perhaps I have misunderstood you. In which case please enlighten me!"

David Fuller's view Thanks for a very interesting email, with which I generally agree, although you may have slightly misunderstood me.

Both the UK and Denmark have their own currencies. I have been talking mainly about the Eurozone, not the EU. My preference has always been for a European free trade area. However, after two disastrous wars many European countries wanted much closer ties, based on political union and a single currency. I have always maintained that currency union would not work without fiscal union.

Now I am off piste here and these matters are for Eurozone citizens to decide. Nevertheless, fiscal union need not be as complete as in the US, but it needs to move in that direction if the single currency is to survive. Above all, I think the Eurozone needs banking union, mutualisation of debt and a single Treasury. This will require a far greater harmonisation of fiscal policies than we see today. Otherwise, how can we have mutualisation of debt if German public sector workers who retire at 67 are required to subsidise French retirees at 62 and Greeks at 55? Some taxes can vary as do state taxes in the USA, although a single Eurozone Treasury would presumably harmonise corporate and income taxes.

Can Europe get from here to there? It depends on how much Eurozone leaders, who ultimately need to take their populations with them, want to keep the euro. Meanwhile, this article, kindly forwarded by a subscriber, is informative regarding the current debate within Germany: German Bailout Rebellion: "We Have Euro-Anarchy".