Converging or Diverging Views of Public Finance? A Comparison between Northern and Southern European Countries

Despite the deepening of European integration and the growing strictness of European fiscal rules, the political economies of the North and the South continue to perform significant differences, to the extent that some observers see this as a possible trigger for European disintegration. While a lot is known about the diverse historical socio-economic trajectories of the two subregions, less is known about whether today this divergence is also present in the criteria with which national policy-makers pursue their taxation and spending policies. Do northern and southern European policy-makers have inherently different views about public finance, or are there some elements of convergence? In this paper, I shall investigate this question with a comparative study of how finance ministers have justified their budgetary policies towards the parliament in the period between 2013 and 2018 in the Netherlands, Germany, Italy and Spain. The analysis focuses on the yearly budget speeches of finance ministers towards the parliament. These speeches feature a series of comparative advantages, such their formal regularity, which renders many factors constant both across time and across countries. Through a self-developed method of policy-claim analysis, the paper provides a comparative overview of both the measures contained in the yearly budgets, as well as of the criteria with which they are justified. The aim of this analysis is to assess whether there is a convergence of policy-making criteria that is attributable to European fiscal rules, or whether instead there is a divergence that is attributable to national redistributive preferences.