Steps towards a European Fiscal Union: Has the revised Stability and Growth Pact delivered so far?

Since 2008-09, the European Union (EU) experienced two major economic crises revealing all the flaws of the existing model of economic governance. By leaving the majority of the countries with high levels of deficit and public debt, the two crises have shown that the Economic and Monetary Union (EMU) is indeed an unfinished project where the monetary union alone is not sufficient to safeguard the entire EU economy. To strengthen the EMU and to mitigate future risks that could possibly lead to the collapse of the euro-area, many called for a deeper fiscal integration by creating a central fiscal capacity for the EMU or, in other words, a fiscal union. Due to the present political unfeasibility of such an endeavour, however, concrete steps towards a European Fiscal Union (EFU) have been modest and the revised Stability and Growth Pact (SGP) remains its core building block. As the Pact defines supranational and shapes the creation of national fiscal rules, maintaining its credibility continues to be vital. This article analyses the effects of the fiscal rules on the public finances of the member states. It is assumed that by adhering to the supranational and adopting quality domestic fiscal rules, the member states are better equipped in remaining fiscally prudent, thus also affirming the revamped SGP as a solid base for the furthering of the EFU. The two-track evaluation approach defines dynamic panels for the EFU as a whole and for the selected country groups. It finds certain benevolent effects on budgetary performance at the EFU level, as well as for the countries with higher quality of the fiscal rules.

The COVID-19 Crisis: The EU Recovery Fund and its Implications for European Integration – a Paradigm Shift

The EU’s latest decision on adopting the recovery fund was revolutionary, both quantitatively and qualitatively. It would also dominate the EU’s economic governance of the decade of the 2020s. This article is an attempt to evaluate whether the EU’s recovery fund was the right policy answers to the post-COVID-19 EU economy or not, and explore its meanings and implications for European integration. This article argues that COVID-19 hit the EU at a time of health and social precariousness, and proved the conventional economic governance unsustainable. Necessities for game-changing in the post-COVID-19 economic governance were justified on both practical and moral grounds. Judging with these yardsticks, the EU’s recovery fund was evaluated as a welcomed paradigm shift in both the ideology and methodology of its economic governance. Beyond a contemporary economic rescue package, the recovery fund implied laying the cornerstone of completing a fiscal union in the Eurozone, for enhancing institutional functions of the European Commission, and for rediscovering the nature of European integration as the rescuer of national states, through the newly-forming consensus between Eurosceptic nationalists and pro-EU integrationists. This article reminds us that the COVID-19 crisis was a crucial opportunity for EU leadership to legitimize the EU’s existence in the post-Brexit era. If well implemented, the recovery fund could usher in a new chapter of European integration. If it fails, European integration would be at risk of further fragmentation and entrench into an ever-stronger anti-EU populism.

The Netherlands’ Rutte is on course for re-election

Significance The scandal could affect the outcome of the general election scheduled for March 17. Impacts The continuation of the current government would maintain the Netherlands’ firm opposition to closer EU fiscal union. The next government is likely to maintain the Netherlands’ cautious approach towards Huawei. A Rutte-led coalition will look to reform the healthcare sector, including by pursuing great levels of regulation over market forces. The government’s caretaker status will have no impact on The Hague’s handling of the COVID-19 crisis.