Abstract
Critiques from academics to the economic governance architecture of the euro area had been emerging also before the US-led financial crisis burst out. When the global financial crisis turned into a eurozone sovereign debts crisis, they transformed into pressing issues. This chapter dwells on the emergence and evolution of the current architecture of the European economic governance established after those two crises. It shows how increasing intergovernmentalism pushed towards even stricter fiscal rules, thus widening the gap between public sentiment and political decisions. We shall also follow the role of scholarly debates in suggesting compromises that might make the European economy more resilient and collective decision-making more effective in tackling both domestic and global challenges, until Covid-19 obliged to a suspension of fiscal rules and to a dramatic rethinking of the whole European economic institutions, policies, and governance.
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Notes
- 1.
As we shall see later, this was exactly the preoccupation that made ECB President Lagarde in March 2020, initially hesitant towards the response to be given to the Covid-19 crisis, fearing that monetary policy would not be assisted by a multi-layered coherent system of fiscal stimulus, at both national and European levels (which eventually occurred).
- 2.
Source: Bureau of Economic Analysis, https://www.bea.gov/data; and Eurostat, https://ec.europa.eu/eurostat/data/database
- 3.
The video of her intervention can be accessed from here: https://www.c-span.org/video/?190872-1/economic-issues; from minute 11:18 to 11:31. The translation from German is ours. On that occasion, she explicitly affirmed her intention to pursue a “new social market economy”, in line with Erhard’s Ordoliberalism, both in Germany and in Europe (Germany being the most important country in Europe, according to her statement). This implied acting in a responsible way, especially as concerns financial and budgetary choices, and guiding globalization: “people have lost their trust in shaping globalization properly”.
- 4.
This is a document on which basis the EC provides guidelines for strategic goals to be achieved by MSs. During the period 2010–2014 this concerned mainly fiscal consolidation. From 2015 to 2018 it mostly targeted investments and structural reforms, until a new Annual Sustainable Growth Survey was introduced by Ursula von Der Leyen in 2019 to account for more indicators, concerning also social inclusion, environmental protection, digital transition, etc. We shall return on this document in the next chapter.
- 5.
“Ponzi finance” is a reference to a fraudulent investing scheme attempted by an Italian immigrant, Carlo Ponzi, in the States during the late 1910s, based on pyramidal structures. The concept is here refereed to the volume of Hyman Minsky, Can it Happen Again? published in 1986, where Ponzi finance is the third step of capitalism, based on expectations that debts made against the purchase of assets will be repaid by selling such assets at a higher price.
- 6.
Tooze’s reconstruction of the history of this famous sentence underlines the random choice to use these words. According to a Reuters’ statement that he quotes: Draghi’s “words were a gamble” (Tooze, 2018, 439). It seems that nobody knew he would pronounce them, neither in the European Capitals nor in Frankfurt; even the Bundesbank President Jens Weidman seemed to have learned it from the news. And that only later, given the positive reaction from the markets, politicians followed.
- 7.
- 8.
See the Report on The Future Energy Scenarios and the Power Flow Tool, University College Dublin: https://www.ucd.ie/newsandopinion/news/2022/february/10/pan-europeansupergridcouldcut32fromenergycostssaysnewucdstudy/
- 9.
- 10.
- 11.
APP stands for Asset Purchase Program.
- 12.
- 13.
The three documents were Further Steps Towards Completing Europe’s Economic and Monetary Union: A Roadmap; Proposal for a Council Regulation on the Establishment of the European Monetary Fund; and a suggestion to draft the European Monetary Fund Statutes. They were all issued on December 6, 2017.
- 14.
It can be found online on the French and German institutional pages, as, for example, here: https://www.elysee.fr/en/emmanuel-macron/2018/06/19/meseberg-declaration-renewing-europes-promises-of-security-and-prosperity
- 15.
- 16.
The proposal was watered down and delayed since the initial intentions, but—since its beginning in the Summer of 2021—still was a great chance for European citizens to make their voice heard on what they expect from the European institutions.
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Masini, F. (2022). Steering the Euro Across the Crises (2008–2019). In: European Economic Governance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-13094-6_4
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