The EU is preparing to return to fiscal chastity as it implements new rules to contain deficits and reduce public debt. However, this shift comes in a global geoeconomic environment and internal socio-political climate that requires a balance between fiscal discipline and necessary investments for sustainable growth. This dilemma echoes Saint Augustine’s plea for chastity, highlighting the challenge of practicing fiscal chastity in economic policy.
The EU’s behavior under the new fiscal rules will determine whether it acts as a repressive stepmother or a helpful fairy godmother. Past crises in 2008 and 2020 demonstrate the impact of these different approaches, with austerity measures leading to prolonged recession in 2008 and more supportive measures enabling a rapid recovery in 2020. The evolving global geoeconomic landscape and societal pressures may push the EU towards a more supportive role in economic governance.
As European society faces changing economic challenges, there is a need for a new approach to governance that balances growth with sustainability and social well-being. Democratic processes will play a crucial role in deciding the priorities of economic policy, reflecting the shift towards a trade-off economy. Strong social and political pressures are likely to influence the EU towards a more supportive role as a fairy godmother in economic governance.
To strengthen European economic governance, efforts are being made to complete the banking union, establish a single capital market, and integrate budgetary resources. These pieces of governance are essential for the EU to effectively implement fiscal rules and support member countries in achieving sustainable growth. The resilience of the EU and democracy in facing crises suggests a potential for a new era of European economic governance.
In conclusion, as Europe prepares to return to fiscal chastity, it must find balance between necessary investments for sustainable growth and fiscal discipline. Through democratic processes and strong social pressure, Europe can move towards becoming more supportive role as fairy godmother in economic governance while strengthening its economic union through completion of banking union, establishment of single capital market and integration budgetary resources.
