Search

Begin New Search Topic Governance Author Frederico Mollet

1. Rethinking EU economic governance: The foundation for an inclusive, green and digital transition

Author:
Francesco De Angelis, Laura Rayner, and Frederico Mollet
Publication Date:
02-2022
Content Type:
Working Paper
Institution:
European Policy Centre (EPC)
Abstract:
The European Union is undertaking a comprehensive review of its economic governance framework, to address longstanding criticisms, respond to the impact of COVID-19, and prepare for the challenges posed by the twin green and digital transitions. This Discussion Paper represents the final instalment of an EPC Task Force series that examined the current approach and proposes 10 concrete policy recommendations to make EU economic governance stronger, greener and fairer: Establish a central investment capacity for green and digital investments (including associated social investments) or, alternatively, a golden rule modelled on the governance of the Recovery and Resilience Facility. Introduce a single net expenditure rule with a country-specific debt target based on nationally designed expenditure and debt plans to enhance political ownership. Shift to a multiannual supervision and assessment framework and introduce fixed medium-term budgetary plans, with a control account tracking deviations. Reform the sanctions regime to increase proportionality, perceived fairness and political enforceability. Differentiate country-specific supervision based on a clear risk threshold. Introduce ‘National Reform and Investment Plans’ modelled on the National Recovery and Resilience Plans, using a commitments-based approach to operationalise social, fiscal, macroeconomic and structural country-specific recommendations. The plans’ components with strong links to fiscal sustainability should govern the use of Stability and Growth Pact (SGP) flexibilities. Reform the Stability and Convergence Programmes (SCPs) to focus more on the investment composition of national fiscal plans and their link to broader policy objectives. Introduce an opinion on the individual and joint impact of the SCPs on imbalances into the Macroeconomic Imbalances Procedure to strengthen its link with the SGP. Introduce new processes into the European Semester to assess non-macroeconomic structural risks, such as climate and environmental risks. Build on the success of the temporary Support to mitigate Unemployment Risks in an Emergency (SURE) programme to create insurance-based mechanisms to support national fiscal policy during downturns.
Topic:
Economics, Governance, European Union, and Digital Transition
Political Geography:
Europe

2. Rethinking EU economic governance: The Stability and Growth Pact

Author:
Francesco De Angelis and Frederico Mollet
Publication Date:
11-2021
Content Type:
Policy Brief
Institution:
European Policy Centre (EPC)
Abstract:
It is time to reimagine the EU’s economic governance. In early 2021, the EPC set out to do just that in its Rethinking EU Economic Governance Task Force. Drawing on insights from participating experts, academics and policymakers, this first Policy Brief in a series of EPC publications outlines how the debate on the Stability and Growth Pact (SGP), the EU’s framework for fiscal and macroeconomic surveillance, has evolved and the reform options that have surfaced. There is broad dissatisfaction with the SGP and how it has fared in an environment of prolonged low-interest rates, missed inflation targets and low growth. In February 2020, the European Commission launched a review of the SGP in an attempt to address its shortcomings, but it was quickly put on hold by COVID-19, when the fiscal rules were suspended. Half a year later, the Commission is finishing what it started. We are in a drastically different world since the European Commission launched the review. Not only has government debt increased significantly, but regional, economic and social divides have worsened, policymakers face inflationary pressures for the first time in decades, and the Recovery and Resilience Facility and accompanying EU-level bond issuance fundamentally changed the EU’s economic architecture. In parallel, there is a widespread acknowledgement that averting, as well as adapting to, the climate crisis requires a steep increase in public investment. Thanks to the EPC Task Force’s ongoing work, Francesco De Angelis and Frederico Mollet can pinpoint the SGP’s major flaws, post-COVID-19 challenges, and five broad categories of reform options: Interpretative flexibility to smooth fiscal adjustment paths and potentially place less emphasis on problematic indicators. Moderate non-treaty reforms to reduce complexity and procyclicality and increase enforceability. The ‘golden rule’ to exempt some public investments from the fiscal rules. Central fiscal capacity for macroeconomic stabilisation. Off-balance-sheet investments to increase public investment.
Topic:
Political Economy, Governance, European Union, Economic Growth, COVID-19, Economic Stability, and European Commission
Political Geography:
Europe

3. Rethinking EU economic governance: The European Semester

Author:
Frederico Mollet
Publication Date:
12-2021
Content Type:
Policy Brief
Institution:
European Policy Centre (EPC)
Abstract:
In the debates over the future of the EU’s economic governance, the reform of the Stability and Growth Pact (SGP) usually takes centre stage. But the European Semester – the framework governing economic policy coordination and country surveillance – is also critical. Reforming and strengthening it is vital given the multiple challenges the EU faces, from the twin green and digital transitions to implementing the Recovery and Resilience Facility (RRF) and tackling the macroeconomic and structural scars left by COVID-19. This Policy Brief, the second in a series of EPC papers that reassess the EU's economic governance policies, sets out proposals for reforming the European Semester across three strands: (i) integrating the RRF into the Semester; (ii) drawing on the positive lessons of the RRF process; and (iii) improving the effectiveness of cross-cutting policy coordination and the Macroeconomic Imbalances Procedure (MIP).
Topic:
Governance, European Union, Economy, COVID-19, and Economic Recovery
Political Geography:
Europe