Summary

1. The transformation of financial relations in the EU has been accelerated by monetary union. 2. The transformation has serious implications for both industrial relations and social protection. 3. The current social policies of the EU are too weak to address these new pressures on European social models. 4. The agenda which is being set for the EU continues to give priority to “market-making ” over “market-correcting ” integration measures. 5. The problem of legitimacy which arises is fundamental to the extent that it takes the form of a challenge to member state participation in European construction. Notes on Financial Transformation and Social Citizenship in the EU 1. The transformation of financial relations in the EU has been accelerated by monetary union. The transformation which is taking place can be viewed as a move from “insider ” to “outsider ” finance. Salient features include: • the dissolution of established patterns of ownership where concentrated equity holdings were the support of dense relations of reciprocity among enterprises; • rapid growth of organised equity markets and of the numbers of companies listed on them; • a move towards less use of bank loans and more use of marketable debt instruments in corporate finance; • a much more prominent role for collective fund managers in the allocation of capital resources. Recently produced ECB data (ECB, 2001) put figures to some of these developments. Bank credit continued in 1999 to supply more than half of the net flow of external finance to non-financial Eurozone corporations (329.3 bn euros out of 625.0 bn) and this growth even accelerated in 2000. The corresponding figure for the US (also in euros) is 149.7 bn in a total of 767.0 bn. However, there was at the same time an explosive growth in the issuance of marketable debt by Eurozone companies- up from 18.1 bn in 1998 to 37.3 bn in 1999. This growth, stimulated by monetary union, was even more rapid in 2000 when a further 70 bn was added to totals outstanding b