I just don't see how it can survive Michael. The ability of the Euro to survive without a central gov't is highly doubtful. Once the currency starts having even more problems or the (individual economies) and there is no consensus among the different nations about how to deal with it- this will only lead to more splits within the Union itself.
We had this in the US. Civil War. Some states wanted to split with the original agreement and our nation's bloodiest war was the result. Those states that wanted to leave were compelled by force to stay within the Union. But short of that force, nothing would have accomplished that. The EU has already begun to split before it ever got started. There will be no compelling military force to make the Union hold together.
In Europe, the differing nations don't even have as much to hold them together as our differing states did; there's no common culture or language. And at any rate, as I said before, creating a Unified Europe will only make the strong nations weaker- never stronger. It would not be in any strong nation's interest to continue with the Union. And then when we look at the other side of the coin, the weak nations in many instances could gain more influence simply by a series of alliances as has always been done throughout history. No need to bind themselves to a Federal System that sees them pushed around by the bigger members. Poland, for example, has gained much from allying itself with the US. Poland stands to lose though if it cedes much power to stronger states in the EU.
I can think of almost no example why there is a good reason for the EU to exist. You don't need the EU to have an open and free market. You don't need the EU to be part of a strong military alliance. You don't need the EU to have a stable currency (The British Pound and the German Mark are two very good examples).
The only advantage there ever was in the EU was for countries like France who wish someone like Germany to help pay their bills and Ireland who sought to improve upon its infrastructure. But these examples always amount to a handout from the richer nations. Germany gains not too much from upgrading Irish roads. Germany gains nothing from subsidizing French Farmers (and I know this is a big issue and it isn't new because it was a big deal when I still lived in Germany).
When we look at the UK, they get shafted even more by completely immersing themselves in the EU. The Queen would no longer be the Head of State- although she would remain the head of state in Australia and Canada for example (or would she? would the EU eventually exert control there as well?). Their military would increasingly come under the control of Brussels. They would lose their own currency. (In the case of the military alone- their military is what makes Britain such a powerful nation on the world stage (along with their alliance with us. Britain can project power around the globe if she needs to.) And what about the Commonwealth and the UNSC veto power? Eventually that veto vote would come under the control of Brussels. Increasingly the EU would pressure the UK to deal in certain ways with its Commonwealth members. I just don't see any advantage for the UK or Germany in the EU. Plus every nation would eventually lose their UN votes.
There are many more negatives than positives. I just don't see it working out and I'm not the only one. Perhaps Europeans have difficulty seeing this from the inside of the situation? It's not going to happen. Especially now that the US has exploited some of the overt fractures in the Union.