Fiscal regulation from the euro crisis to the COVID-19 pandemic: patterns, determinants and implications

Abstract

This panel focuses on the evolution of EU fiscal regulation under the pressure of two major crises. When the euro crisis erupted, the EU reacted by strengthening fiscal regulation. The rules of the Stability and Growth Pact (SGP) became stricter and new measures constraining the spending of member states (MS) were adopted. On the contrary, with the output of the COVID-19 pandemic, for the first time the very same fiscal rules were temporarily suspended. Thanks to an unprecedented recovery programme – Next Generation EU (NGEU) – the EU could mobilise large amount of resources and distribute them to the MS. A new European fiscal capacity seemed to be centre stage in the reaction to the pandemic. However, the EU’s fiscal rules have only been suspended, not abolished. Moreover, NGEU entails forms of conditionality which link to the pre-existing fiscal regulation. This panel welcomes empirical and conceptual/theoretical papers on how and why EU fiscal regulation and the related regulatory governance have changed from the euro crisis to the COVID-19 pandemic in terms of form, strength, scope and impact on both MS and on the EU as a whole. Has the governance of fiscal regulation shifted over time from intergovernmental to being (slightly) more supranational? Ultimately, the panel is interested in understanding the “fate” of fiscal regulation after the COVID-19 pandemic. Is fiscal regulation, at least in its strictest form, off the table or did it survive – technically as part of conditionality mechanism of NGEU and politically because key political actors at some point will want the SGP to be back as prior to the pandemic? Has less fiscal regulation and more fiscal capacity changed the nature of EU fiscal integration and made the EU more similar to a consolidated federal polity?

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