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In response to crises, new challenges and enduring changes in the economic environment, the EU has embarked on a process of transformation to an extent unforeseen by its architects.
In response to crises, new challenges and enduring changes in the economic environment, the EU has embarked on a process of transformation to an extent unforeseen by its architects.
These developments have taken place largely within the framework of EU primary law, which dates back several decades. Although the flexibility of policy responses to recent crises has been commendable, growing legal challenges to their legitimacy within the framework of EU treaties suggest that the system has been stretched to breaking point.
A new CEPR Policy Insight (https://cepr.org/active/publications/policy_insights/viewpi.php?pino=114) prepared jointly by leading economists and lawyers specialised in EU matters, argues that significant reform is needed to ensure a more stable macroeconomic policy system, able both to meet the challenges of the future and to fulfil the economic requirements and legal constraints. The authors highlight three key policy fields for reform: the relationship between the monetary and the fiscal pillars; fiscal rules; the Next Generation EU Initiative (NGEU) and the potential for a common fiscal capacity. In each case, the state of the policy architecture is examined, proposals for reforms are made and the corresponding legal requirements are assessed.
European policymakers should resist the temptation to assume Europe will return to normalcy post-pandemic. Rather, the EU should prepare for turbulent times ahead.
Neither economists nor jurists can address these issues alone but, crucially, most of the reforms do not require amending the EU Treaties, and significant improvement can be brought to the policy system while remaining within the confine of the existing primary law framework, if there is agreement for such reforms. This unprecedented joint effort by economists and lawyers proposes an ambitious yet feasible blueprint for reforming the European Macroeconomic policy system.
On Thursday 16th December, at the online launch of this Policy Insight, authors, Jean Pisani-Ferry, Lucrezia Reichlin and Armin Steinbach, presented their findings. Beatrice Weder di Mauro introduced the session.
