Austerity’s failures and policy learning: mapping European Commission officials’ beliefs on fiscal governance in the post-crisis EU

Abstract

After an initial phase of firefighting against the euro crisis that began in 2010, one that was characterized by policies that focused on strict austerity, from 2014 onwards the European Commission gradually began to ease its recommendations about fiscal consolidation. Between 2015 and 2016, this policy turn was reflected in series of procedural changes in the European Semester. These gave the Commission a certain degree of discretion in applying the rules and interpreting the benchmarks of the post-crisis EU economic governance arrangements. This article investigates if this double shift in fiscal policy and governance that was initiated in 2014 has been consolidated in 2019, and, if so, what has driven that consolidation. By building on the literatures on EU politicization and policy learning, it asks whether the character of this intra-paradigm policy shift has been more Bayesian or sociological. Based on interviews and on a small-scale survey conducted with key civil servants working at the European Commission, we find evidence to support the putative explanation that, through a political process of policy learning, European Semester officials have acquired a more politicized and flexible practice of fiscal governance and a more social vision of the European Semester.

Keywords:

• Austerity
• policy learning
• European Commission
• European Semester
• policy paradigms
• euro crisis

Acknowledgements

I am grateful to the people of the Communication Studies Department of the Vrije Universiteit Brussel for their hospitality during my research stay in the Belgian capital, and particuarly to Dr. Benjamin De Cleen. My thanks also go to Marga León, and three anonymous reviewers of Review of International Political Economy, for their extremely helpful feedback on earlier drafts of the article.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 AMECO database.

2 It is important to clarify how the concept of narrative plays a “dual role” in the interpretivist-inspired approach to constructivist institutionalism deployed in the article: “the term refers, first, to the stories by which the people we studied made sense of their worlds. Second, it refers to the stories by which we made sense of the narratives and actions of the people we studied” (Bevir & Rhodes, 2012, p. 205). In this sense, narrative refers to both the organising perspectives through which the agents under study link beliefs, dilemmas and practices as well as the basic units of explanation through which the political scientist imagine and structure agents’ actions.

3 There are three other DGs involved in the fiscal surveillance process of the European Semester: DG Taxation and Customs Union, Eurostat and the Secretariat-General.

4 The official directory of the European Commission can be found on the ‘WhoIsWho’ website (European Commission, 2019b). The identification of those Units of DG EMPL and DG ECFIN involved in the European Semester was carried out with the help of an officer of the Commission. In the case of DG EMPL, the survey was sent only to the fourteen officials working in the unit called ‘Employment and Social Aspects of the European Semester’. In the case of DG ECFIN, it was sent to most units. The survey was not sent to the administrative staff (administrative assistants, secretaries, legal officers), statistical assistants and seconded national experts working in the units. It was not possible to contact 41 of the officials of the units identified as involved in the European Semester.

5 This thesis, as its name indicates, defends the idea that fiscal contractions can have expansionary effects on output via ‘non-Keynesian’ effects (Blyth, 2013a).

6 AMECO database.

7 The Commission’s renewal of its fiscal policy approach has paralleled the more generalised rethinking of the macroeconomic role of fiscal policy that has taken place globally since the Great Recession (Ban & Patenaude, 2019; Clift, 2018). Its main upshot has been to retrieve the active role that fiscal policy needs to play in stabilising the economy at the zero-lower bound (IMF, 2013). As such, the pre-crisis belief that monetary policy alone was enough for economic stabilisation, even in recessionary conditions, has been modified. Furthermore, an explicit correlate of this renewed vision of the expanded role for fiscal policy is a more tolerant vision of high volumes of public debt (Blanchard, 2019; Furman & Summers, 2019).

8 Fiscal discipline here means the belief in governance focused on the need to maintain ‘close control over government spending and tax revenues, even as budget deficits eventually rise’ (Cardim de Carvalho, 2018).

9 Translation from the language in which the interview was conducted.

10 According to the article 17 of the Treaty of the European Union, the Commission “shall be completely independent. […] The members of the Commission shall neither seek nor take instructions from any Government or other institution, body, office or entity”. Note that this is the same formula used to define the character of the ECB, the Court of Auditors and the European Ombudsman in the Treaty on the Functioning of the European Union.

11 The EFB (2019), for instance, has advocated a reformed SGP which would be based on one single target (sustainable public debt), one single instrument (controlling net expenditure growth) and one general escape clause.

12 In this line, the three policy priorities forwarded by the DG ECFIN to the new von der Leyen Commission are: increasing the flexibility of the fiscal rules to encourage green investment; establishing a harmonised European unemployment scheme; and reforming the SGP (retrieved from: https://g8fip1kplyr33r3krz5b97d1-wpengine.netdna-ssl.com/wp-content/uploads/2019/08/clean_definite2.pdf). See also the political guidelines for the new Commission (von der Leyen, 2019, p. 9).

Additional information

Funding

This study has been funded by the FPU doctoral scholarship of the Spanish Ministry of Science, Innovation and Universities.

Notes on contributors

Joan Miró

Joan Miró is postdoctoral researcher at Department of Social and Political Sciences of the University of Milan. His research interests include comparative social policy, discourse analysis, international political economy and EU integration theory. He has recently published in international peer-reviewed journals, such as Policy Studies, Socio-Economic Review, Social Politics (with Marga León, Antonino Sorrenti and Emmanuele Pavolini) and Constellations.