The letter and the bond: coalitions, anti-coalitions, and the adoption of the coronabond in the European Union

The Covid-19 pandemic led to an important reconfiguration of economic governance in the European Union towards deeper economic integration. This fits uneasily with predictions of an inevitable political ‘lock-in’ stemming from a responsibility–responsiveness dilemma, or an inexorably constraining politicisation. Investigating the evolution in discourses on and policies of economic governance in the EU, the papers in this collection approach the relationship between prevailing notions of responsible and responsive government as socially constructed and critically contingent upon politicisation processes. The special issue explores the reconfiguration of economic governance in the EU through multi-level analysis of politicisation, ranging from citizens’ attitudes to conflicts over central banking mandates, using a variety of methodological toolkits. As the collection shows, the shift towards investment, fiscal sharing, and green transition in the new recovery programme followed the emergence of a form of ‘responsive responsibility’ dating back to the aftermath of the euro crisis and which has led to the incorporation of responsiveness imperatives in prevailing notions of ‘responsible government’.

EU economic governance, as organized in the Treaties and implemented during the first years of the Economic and Monetary Union (EMU), strongly echoed the philosophy of “new governance” theories, and closely resembled the general patterns of the Open Method of Coordination (OMC). This Article seeks to determine whether this still holds true after the Eurozone crisis, and the subsequent fundamental revamping of the EMU’s economic pillar. It is argued that the Eurocrisis set in motion a dual process of expansion and intensification of EU intervention in economic policy, and brought about a new economic governance model. This new model relies on a certain understanding of policy coordination – supranationally driven, increasingly substantive and designed to harmonize – which sharply contrasts with that at the heart of new governance and the OMC. On that basis, the Article further argues that in the post-crisis era, EU economic governance radically departs from the OMC pattern and its main constitutive features (horizontality, experimentation, diversity accommodation), so much so that it has lost most of its relevance as a conceptual framework to characterize EU economic policy. Finally, the Article highlights the fundamentally paradoxical nature of the post-crisis EU economic governance framework, and the disparities that exist, on the one hand between the reality of post-crisis economic coordination and the relevant institutional discourse, and on the other hand, between the extensive powers the EU now enjoys under that governance framework, and the weak constitutional settlement that supports it.

We test whether two key elements of the EU and Euro Area economic governance framework, the Stability and Growth Pact and the Lisbon Strategy, have had any impact on macroeconomic outcomes. We test this proposition using a difference-in-difference approach on a panel of over 30 countries, some of which are non-EU (control group). Hence, the impact of the EU economic governance pillars is evaluated based on both the performance before and after their application as well as against the control group. We find strong and robust evidence that neither the Stability and Growth Pact nor the Lisbon Strategy have had a significant beneficial impact on fiscal and economic performance outcomes. We conclude that a profound reform of these pillars is needed to make them work in the next decade.

The euro crisis made visible the omitted stage in the European integration process. The EU jumped from the common market straight to the monetary union, neglecting the formation of the economic union. The new EU economic governance is a combination of a vertical shift of competences, i.e. from one level of government to another level, and a horizontal shift of powers and competences, i.e. from elected governments to unelected government bodies entrusted with (parts of) government policies, from discretionary policy towards rules. In both types there is a risk of accountability problems, although of a different kind.The purpose of this paper is to analyze the new EU economic governance within the conceptual framework of these vertical and horizontal shifts. This two-dimensional approach offers a better analytical tool than the more traditional one-dimensional fiscal federalism approach. In the first part of the paper the focus is on the policy domains that are the objects in the shifting process. Budgetary policy mainly is at stake, but also banking regulation and monetary policy are partly involved. The second part of the paper deals with the relevant aspects of the theories on the division of powers along vertical and horizontal lines. The fiscal federalism approach to vertical separation and the time consistency theory on the horizontal distribution of power are briefly exposed. In the third part the power shifts occurring within the new EU economic governance are presented and defined in terms of our framework of vertical and horizontal power shifts. Finally the accountability problems of these shifts are analyzed.

France and Germany have historically played pivotal roles in formulating and advancing the economic policy of the European Union. The conceptual frameworks of German ordoliberalism and French dirigisme underpin the dual foundations of European economic integration. The United Kingdom’s departure from the EU has reconfigured the composition of the Union’s core, amplifying Germany’s significance. This shift simultaneously elevates the Franco-German partnership while rendering France’s position within the Union increasingly contingent upon its tangible economic strength. This article seeks to examine the evolving role of France within the EU’s economic architecture, identify critical long-term trends, and forecast possible realignments in the balance of power within EU economic governance. The analysis includes an overview of France’s intellectual and executive contributions to European economic and monetary policies, followed by a comparative assessment of international statistical data, emphasizing GDP dynamics, demographic trends, per capita income, trade balance, and R&D investment.The findings reveal that, despite being the EU’s second-largest economy, France has exerted a disproportionate influence on the Union’s economic governance, surpassing that of any other member state. French representation in the upper echelons of EU economic and financial policymaking has been unmatched. In the contemporary geopolitical landscape, French dirigisme is experiencing a resurgence of relevance.Nevertheless, France’s share of the EU’s overall GDP has been progressively declining, even as its demographic contribution to the Union has grown. With respect to per capita income, France ranks 10th among EU member states, marking the lowest position among the core economies. The aftermath of the global financial crisis and the eurozone debt crisis has led to a significant erosion of France’s international competitiveness. Should these trends persist, projections indicate that France’s GDP per capita will fall below the EU average by the end of the decade, potentially signaling a shift from core to semi-peripheral status. This development would exacerbate the asymmetry within the Franco-German axis, complicating efforts to recalibrate EU economic governance and policy direction.

In addition to legislation, the European Union also uses a hybrid policy method called 'economic governance' to make annual (country specific) recommendations to the member states, the follow-up of which is monitored by the institutions through various mechanisms in the European Semester. These recommendations (or guidelines) relate to the Member State budget and the economy, but also to the social and employment policies of the Member States. While the EU does not have strong legislative powers in the social dimension, it made extensive use - certainly during the crisis - of EU economic governance to issue (theoretically) soft law guidelines on employment, labour law and social security systems. Many of the recommendations related to wage setting or directly to a reform of the collective bargaining system (often decentralisation). Such recommendations and subsequent Member States' measures encroach upon the fundamental right of the social partners to collective bargaining (and social dialogue). This right, which gives the social partners a certain autonomy to negotiate with each other on social matters, is protected not only by the EU legal order itself, but also by the International Labour Organisation and the Council of Europe (ECHR and ESH). EU economic governance has, during the crisis led to violations of the right to collective bargaining by national measures. The legal nature of the economic governance mechanisms is less 'soft law' than seems at first sight. Especially in the event of budgetary problems or crisis situations (such as e.g. in Greece and Portugal), the instruments of 'economic governance' have hybrid characteristics of both soft law and hard law, thus limiting the margin of appreciation of the Member States. From the evaluation of the recommendations and measures we can draw lessons for the EU (and the Member States) to better reconcile EU economic governance with the right to collective bargaining, taking into account the post-crisis climate and the renewed focus on the EU's social dimension under the Juncker Commission (and possibly its successor?).

Common EU debt instruments (also known as Eurobonds or, more recently, Coronabonds), have often been portrayed as a panacea in EU economic governance. A plethora of proposals emerged in academic and policy circles, especially in times of political and economic crisis. Limited instances of debt mutualisation have existed in Europe at least since the 1970s oil shocks. During the Eurozone crisis, academics and policymakers went as far as to call for the establishment of treasury-like mechanisms mutualising existing national debt and issuing new joint debt securities. Yet, leaders instead mainly implemented loans-based solutions, such as the European Stability Mechanism. Conversely, in 2020, amid the Covid-19 crisis, the EU managed to create an ambitious common debt programme in the context of its Recovery Plan “Next Generation EU”. What changed between these crises? What factors played a role in making some proposals a reality and others unfeasible? To shed some light on these questions, this chapter presents and analyses proposals and instances of EU debt mutualisation during the Eurozone and the Covid-19 crises. By considering their solidarity and responsibility features, it induces a conceptual framework to better understand their legitimacy, and ultimately their political and economic feasibility. It concludes by suggesting how this same conceptual framework may shed light on other domains of EU crisis response.

This paper sets out to address to what extent and how national parliaments scrutinize the European Semester process. My central argument is that the European semester constitutes a complex regime of different policy-making modes, which poses severe challenges for effective parliamentary scrutiny of the process. Through paired comparison between two Nordic parliaments and the Spanish parliament, I identify a number of accountability challenges in the scrutiny of the European Semester. Although we should expect that parliaments of euro countries are more motivated for scrutinizing the European Semester as the process has stronger implications for national budgetary policy, the findings show the importance of formal monitoring capabilities. Thus, the ability to counteract the accountability challenges of the European Semester is not equal across parliamentary chambers of the EU leading to a reinforcement of existing differences of parliamentary involvement in EU policy-making.

The euro crisis has sparked changes in the EU's economic governance framework and a crisis of legitimacy across the union. While the institutional repercussions of the crisis have been studied before, the democratic impact at the national level has received much less attention. This paper aims to fill this gap, focusing on the procedural changes that the EU's new economic governance (NEG) framework has brought to national budgetary decision‐making. Building upon the Varieties of Democracy framework, the paper adds empirical nuance and conceptual clarity to the notion of ‘throughput legitimacy’ and its components: openness, inclusiveness, transparency and accountability. Detailed case studies of post‐crisis Austria, Italy and Portugal show that the NEG improved access to national budgetary decision‐making and enhanced executive scrutiny, while excessive complexity remains the Achilles' heel of EU fiscal rules. We submit that these procedural changes are too meaningful to be overlooked in post‐crisis debates about EU democracy.

How should decision‐making under EU economic governance be understood following the euro‐crisis? This article argues, contra existing depictions, that the post‐crisis EU has increasingly adopted methods of decision‐making in the economic field which marry the decision‐making structure of inter‐governmentalism with the supervisory and implementation framework of the Community Method. While this ‘post‐crisis’ method has arisen for clear reasons – to achieve economic convergence between eurozone states in an environment where previous models of decision‐making were unsuitable or unwanted – it also carries important normative implications. Post‐crisis governance departs from the mechanisms of legal and political accountability present in previous forms of EU decision‐making without substituting new models of accountability in their place. Providing appropriate channels of political and legal control in the EU's ‘new’ economic governance should be seen as a crucial task for the coming decade.

This article examines the role of the European parliament (EP) in providing ideational alternatives to austerity in the context of the Eurozone crisis and the COVID-19 crisis. Despite the EP’s limited formal role in EU economic governance, it is a key site for democratic debate and contestation. Analyzing EP debates about austerity allows us to understand the possibilities and limitations for ideational change at the EU level from the perspective of supranational party politics. Through a longitudinal analysis (2012–2021) of EP resolutions on the European Commission’s Annual Growth Surveys, the article asks how ideational battles around austerity have unfolded between the EP’s political groups and what factors have shaped the EP’s positions. Theoretically, the article draws on the literature on ideational political economy and discoursive institutionalism. The article argues that instead of providing alternatives, the EP and its Committee on Economic and Monetary Affairs have contributed to the ideational hold of austerity due to the weakness of the alternatives of the center-left and their compatibility with austerity. Party-political and institutional factors, such as broad left/right compromises and a strict division of labor between the EP’s committees, further constrain ideational change.

This working paper discusses the future of the EU’s ‘new governance’ paradigm, as a particular category of the EU’s legal acts in light of developments in EU economic governance following the Euro crisis. [...]

The main objective of this chapter is to explore and describe the EU's management of the economic and financial crisis, the leading role of the European Council in economic governance, the governmental and parliamentary institutions involved in EU economic governance, and the democratic character of the new system of economic governance. Applying new conceptual and methodological approaches, this study advances to the next level research on the political relevance of EU-level coordination in the area of economic governance, the new governance of fiscal discipline, the dynamic of building sovereignty at the EU level, and the economic governance of the Euro area. This chapter discusses the major trends in scholarship about the evolution of EU economic governance, the changing decision-making agenda of EU economic governance, the deficiencies in EU economic governance exposed by the crisis, and the slowness of the European measures on the regulation and governance of finance. The authors is specifically interested in how previous research investigated the categorization and exercise of EU competences, the economic government of the Euro area, supranational modes of policymaking, and the tendency of EU economic governance towards intergovernmental policy coordination.

Prior to the end of the Cold War, the concept of security has been expanded as no longer strictly related to military issues, but also to environmental, societal and economic matters. The theory of securitization argues that security is a socially constructed concept and that a securitizing actor can present any issue as a security threat through mere speech acts. Even though this theory has recently gained academic attention, its application, combined with discourse analysis in examining economic and monetary issues on a European level, has been limited. Drawing from this theoretical gap in the existing literature on economic securitization on the one hand, and in the discursive dimension of the Economic and Monetary Union (EMU) on the other, this thesis examines whether securitization moves have been attempted in the European Union (EU) discourse in the recent Eurozone debt crisis. The study uses discourse and content analysis to unveil the ideational patterns within the discourse coming from the President of the European Commission, the Commissioner for Economic and Financial Affairs, the President of the European Council, European Council conclusions, the President of the European Parliament and the President of the European Central Bank. In addition to examining the presence and patterns of securitization in the official EU discourse, this thesis also investigates common trends and contradictions.

The adoption of the EU's Multiannual Financial Framework (MFF), the long-term budget for the period 2021–2027, marked an end to difficult negotiations. The financial framework sets the maximum amount each year for broad policy areas in the EU budget and fixes an overall annual ceiling on payment and commitment appropriations. As a result, it shapes EU policies for years to come. Labelled 'a historic budget for a historic moment', the prolonged negotiations were considered as polarized and politicized as never before. They had their roots in the euro crisis and the ideational struggles about the EMU economic governance, controversies around the arrival and reception of forced migrants in 2015, and challenges of how to address the economic and social effects of the Covid-19 pandemic. This introduction to the edited volume 'EU Policymaking at a Crossroads: Negotiating the 2021–2027 Budget' foregrounds the 'struggle over ideas' (Stone) that unfolded during the negotiations and shows how research on European integration can benefit from an interpretive focus on meaning and discourse.