EU fiscal governance and the role of the European Semester

From the Eurocrisis to the Covid 19 pandemic the Union and the Eurozone in particular has experienced an intriguing development of fiscal governance. While in the Eurocrisis strengthening of deficit and debt rules dominated the political discourse and the subsequent legislation that conferred new powers to the Commission in the European Semester, with the outbreak of the pandemic rules were relaxed and de facto suspended. However, while the Commission continued its scrutiny in the European semester it showed considerable flexibility in regard to timing and to issuing recommendations. At the same time and with the pandemic still raging, the debate about the fiscal rulebook and governance has returned. The debate is marked by the old divide between strengthening and relaxing of rules. However, both camps concur on the need for reform and new national positions are coming to the fore in the wake of government change. Yet, does this development impact on the administration of the European semester? How does the Commission tackle the concomitance of classical and NGEU/RRF induced national fiscal plans? How do these plans mirror fiscal reform needs and the new but earmarked spending policy enshrined in the RRF? In this paper we aim at charting the practice of the Commission’ s monitoring of member states plans with a focus on the RRF and at offering a preliminary assessment. Our basic assumption is that the Commission views national plans with flexibility and thus opens windows of opportunity for growth, but also for resistance to deep reforms. This will in turn fuel the divide between frugal and indebted states over the question about the future of European fiscal rules.