The European Union (EU) is set to return to fiscal responsibility by implementing new rules to control deficits and reduce public debt. However, this move towards budgetary virtue must strike a balance between the need for significant investments to achieve sustainable, inclusive growth and the necessity of fiscal restraint. The EU’s behavior under the new fiscal rules will determine whether it acts as a repressive stepmother or a helpful fairy godmother.
The global geoeconomic environment and internal socio-political climate will influence the EU’s decision-making. Past crises have shown that austerity measures can lead to prolonged recession and social upheaval, while flexibility and support can facilitate a quicker recovery. As such, democratic processes will be crucial in navigating these challenges and striking a balance between growth, climate action, and social cohesion.
The changing economic landscape calls for a new approach to economic governance. The report from the Economic and Social Council in Spain highlights the importance of balancing macroeconomic stability with strategic investments to address the climate crisis and enhance competitiveness. It emphasizes the need for a more flexible and protective economic governance system to support sustainable growth and social well-being.
To function effectively as a supportive force for its member states, European economic governance must evolve to meet these demands. This includes completing the banking union, creating a single capital market, and integrating budgetary resources. These improvements are essential for the EU to emerge as an effective partner in promoting economic growth and social progress across its member states.
Overall, by embracing change and implementing necessary reforms, the EU has the potential to transition from a restrictive role to a more supportive and proactive one. Guided by democratic principles responsive to societal needs, it can emerge as an influential force for economic growth and social progress in Europe.
