The EU Governance of Fiscal Regulation and Financial Assistance: What Differences Between the Euro Crisis and the Covid-19 Pandemic? A Policy Learning Perspective

This paper examines the governance of fiscal regulation and financial assistance in the European Union (EU) during the Euro crisis and the Covid-19 pandemic. It adopts a ‘historical institutionalism’ framework to provide a theory-driven interpretation of institutional change following a large-scale exogenous shock. In terms of fiscal regulation, the paper looks at the European Semester and the rules governing the adoption, monitoring and enforcement of budgetary policies in EU Member States. In terms of financial assistance, it discusses the rules governing the disbursement and withdrawal of funding to the Member States in the context of crisis-management. The paper seeks to address the following questions: How did fiscal regulation and financial assistance work during the Euro crisis and the Covid-19 pandemic? Is there a change in the governance of fiscal regulation and financial assistance between the two crises? And if so, why? By relying on document analysis and publicly available interviews, the paper argues that the rules-based EU ‘fiscal surveillance’ during the Euro crisis left room to ‘fiscal guidance’ in the context of the Covid-19 pandemic, and that financial assistance moved from ‘unconstrained intergovernmentalism’ with the European Stability Mechanism (ESM) to ‘constrained supranationalism’ with the Recovery and Resilience Facility (RRF). Such a change in the governance of fiscal regulation and financial assistance owes much to an intra-crisis policy-learning process of the bargaining type.