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Mr. Osborne told BBC Radio the euro zone would also need "a greater harmonization or integration of fiscal policies or banking policies".
The Social Democrats are hardly an alternative for voters frustrated with Europe, advocating the kind of deeper integration of fiscal policies among the countries of the euro zone that Mrs. Merkel has resisted.
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Many economists believe the only way out of the euro zone's debt crisis in the long run may be closer integration of national fiscal policies -- for example, a joint euro zone guarantee for countries' bonds, or issuance of a joint euro zone bond to finance all countries.
The crisis is recognized by economists as highlighting the depth of financial integration in Europe, contrasted with the lack of fiscal integration and political unification necessary to prevent or decisively respond to crises.
Therefore, a better integration of economic and fiscal policies and a significant increase in economic transfers within the euro zone are needed.
There has to be some form of fiscal integration and some agreement on austerity measures".
The current "mismatch" between a single monetary policy and a lack of fiscal integration is not sustainable, he added.
First, we have a high degree of fiscal integration in this country that goes along with its elected central government.
And Peter Kenen's addition, which stressed the importance of fiscal integration, made the case against the euro even stronger.
Low labor mobility is a problem; but lack of fiscal integration and lack of banking union have been even bigger problems.
Europe has the same problem, exacerbated by the lack of fiscal integration, which has caused it to adopt overall a much tighter fiscal policy than the United States.
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