Sean O'Grady: This deal ties Europe ever more closely – and leaves us on the margins

The European project is much like riding a bicycle; the rider either pedals forward or falls over. The current sovereign debt crisis is forcing the pace of political integration in a way few thought possible.

Even Eurosceptics such as the Chancellor, George Osborne, now point towards far deeper co-operation and a European super-state in all but name as the "inexorable logic" of what is going on now.

The Tory attitude to Europe has basically gone through three stages. First there was Margaret Thatcher's early insistence that the 1986 Delors plan for a single currency, and all that flowed from it, was just a bad idea for everyone, full stop and veto. Then along came John Major who said it might not be for us, but the rest could go ahead with our blessing. Now comes George Osborne screaming. "Faster! Faster!"

When that happens it will mean, for good or ill, that the UK will become even more distanced from the rest of the European Union, as more and more members join the single currency when they become ready. A two-speed Europe may soon become a reality, and in practical terms it will mean a large, potentially powerful economic entity that makes crucial decisions affecting our economic future but in which we have no vote, and perhaps not much influence. Whatever David Cameron wanted to say to our European partners at the emergency summit in Brussels he couldn't because he wasn't invited. As and when Europe returns to normality, that lack of influence and political imbalance may begin to grate.

At all events, Europe's monetary union is, as the Treaty of Rome famously put it, becoming "ever closer", as Germany and the other solvent nations begin to take on more and more of the debt of their weaker partners. Eventually, the eurozone may decide to pool or Europeanise its debts so there would no longer be Greek or Italian or Portuguese debts for the markets to attack but eurobonds, behind which stand all the governments and taxpayers of the eurozone.

That strongly implies some control at a European level of the growth of that Euro-debt. And that means controlling the difference between what governments tax and spend, that is, fiscal policy.

This may well be what President Sarkozy had in mind when he talks about "European economic governance" and the present bailout fund, the European Financial Stability Facility, eventually becoming a European IMF, or EMF. He has in the past openly promoted the idea of a "European Treasury". He has a point. As has been noted many times, and as we can now see from experience, monetary unions work best if they are accompanied by fiscal unions.

The monetary union of the eurozone – the Euro single currency area – allowed member states too much leeway over their budget deficits, or fiscal policy – their tax and public-spending plans. Even though there were supposedly strict treaty criteria, these were sometimes ignored or fiddled and, when the financial crisis hit, the rulebook was chucked out the window.

Despite the dryness of the phrase, fiscal policy goes to the heart of nation's politics – what should the level of public spending be? How should the nation pay for it? How much to borrow and how much tax to levy? Which taxes? Much of the detail of these things can be safely left to national finance ministers, but the overall level of public borrowings, and, in practical terms, what governments can realistically tax and spend, will rest with some centralised European treasury department.

A European finance minister will have to set the borrowing limits of individual nations, irrespective of national electorates' views. He, or she, will have to determine where the structural funds in the EU be spent. The Euro-treasury will have to decide if the eurozone or the EU operates any longer with widely diverging rates of corporation and other taxes. He will have to levy fines on nations. He might even seize their assets and control their bank accounts. He would be a very important figure. Much more so than the Chancellor of the Exchequer... The debate about Britain joining the euro could start all over again.