Economic and fiscal policy coordination after the crisis: is the European Semester promoting more or less state intervention?

Abstract

The European Union (EU)and its Economic and Monetary Union (EMU) in particularis often criticized as a predominantly marketoriented project. We analyse to what extent such claims can be substantiated by focusing on one key aspect of the EU's post-crisis framework for economic governance: the country-specific recommendations (CSRs) that the EU has been issuing annually since 2011. Based on an original dataset, we analyse more than 1300 CSRs, which show that the EU does not push uniformly for less state intervention. Rather, the CSRs tend to suggest fiscal restraint and less protection for labour market insiders, while simultaneously promoting measures that benefit vulnerable groups in society. During the second decade of EMU, CSRs have gradually become more permissive of higher public spending and more in favour of worker protection, while the share of recommendations advocating more social protection has stagnated at a high level.

Super Mario 2: comparing the technocrat-led Monti and Draghi governments in Italy

“…As documented by recent research, during the last decade, European recommendations have shifted from the heavy focus on austerity of the 2011 to 2014 period, to the socially oriented focus of the period since then, this thanks to the more active involvement of the EU's social and employment policy actors (D'Erman et al 2019;Haas et al 2020;Zeitlin and Vanhercke 2018). This over-time difference in the contents of CSRs is also evident in the case of Italy.…”

Is Austrian budgetary policy still “political”? A cross-time comparison of budget speeches

“…The reversal of the trend between the 2011-2013 and the 2014-2015 periods corresponds partially to the socalled 'socialization of the European Semester' (Zeitlin/ Vanhercke 2018) by which -for most member statesthe Council's recommendations partially shift their focus from financial to societal matters. In the Austrian case, these recommendations featured seemingly contradictory policy-prescriptions, recommending both the continuation of a fiscal consolidation course as well as the improvement of social protection (Haas et al 2020). Rather than autonomous policy-decisions, the fiscal stimulus policies introduced between 2014 and 2015 could thus be seen as an effort of adhering to these European demands.…”

Democratic legitimacy in the post-crisis EMU

“…As such, the European Semester builds upon the multilateral surveillance of economic policies as it already took place before the crisis, but it has reinforced its preventive role in identifying any parameters in member states' finances and economic order that may make them vulnerable and threaten the stability of the euro area as a whole (Haas et al 2020). In that sense, there is in principle a double claim to output legitimacy here, as citizens in the EU are not only served by the stability of the euro area but also by the policy recommendations that come out of the process and that may help increase the quality of member state government policies.…”