It is clear that from the outset that European Union, as it is now called, had greater plans than a mere free trade area. The Rome Treaty provided quite explicitly for the cretion of not merly a customs union but indeed a common market. Although it does not call for the development of an economic union, having embarked on such a process of economic intergaration it might prove very difficult not to go on and realize an economic union. That is to say that having developed a common market member states could be pushed into proceeding further into a greater degree of intergaration to make secure and to fully benefit from the free movement of goods, services and factors of production as well as various forms of common policies. Some economists, in fact, argue that economic union, might prove to be an inescapable destination. By 1992 a single common market in Europe was coming into force by the Single European Act of 1987 which made 1999 the completion deadline of the single market. As Europe moved towards a single common market pressure for common macro policy was increasing. One of the most important contributions to creating a stable, dynamic and fully intergarted market is macro economic convergence and exchange rate stability. The European Monetary system , set up in 1979 was an ambitious project. It established a common currency unit, the Ecu, to which curriencies are linked to a central rate within an exchange rate mechanism. Currencies are allowed to fluctuate within either +2.25 or –2.25 per cent of their central rate. The aim of the system was to establish closer monetary co-operation leading too a zone of monetart stability within the meber countries. With this mechanism in place it became clear that there was a need for convergence of economic performance but laso this may be a burden on less prosperous countries such as Ireland, Italy and even the U.K.At the Hanover summit in 1988, the European Council asked the p...
