Last week, the European Commission (EC) relaunched its review of EU economic governance, following the pandemic. Announced on the EC’s website, it is looking to reignite the ‘public debate on the review of the EU economic governance framework’ following the ‘changed circumstances’ arising from covid-19.
The full statement outlining what the EC is seeking to do, and how, and why, and through what means comes to exactly 1,800 words, roughly twice the length that this column will expand to. And, yet, there is very little in there of actual substance. Finding any details in this is a little like grasping at mist.
Structurally, the piece forms a series of questions that the EC poses to itself, with answers that follow.
Aggravated existing issues
When the EC talks about the impacts of the pandemic on the economy, it says: “The covid-19 pandemic resulted in an unprecedented contraction in EU economic activity in 2020. Due to the severe recession and the necessary, forceful policy response, deficits and debt ratios increased in all member states and are expected to remain markedly above pre-pandemic levels in 2021 and 2022. In terms of labour market, the crisis has had a severe impact on certain economic sectors, although overall employment contracted mildly thanks to the policy responses at national and EU levels.”
It adds: “In general, the crisis has aggravated a number of pre-existing vulnerabilities. Internal imbalances related to high government and private debt have increased. Pre-pandemic dynamic house price trends have persisted and mortgage debt has continued to grow significantly in some countries. Current account deficits have widened in those countries most dependent on tourism revenues. At the same time, the correction of current account surpluses has stalled. Moving forward, new imbalances may emerge as a result of structural transformations accelerated by the covid-19 crisis.”
Much of this has been known and spoken about repeatedly in 2020 and 2021. And while it is nice that the EC were to write it down in case we had missed it, there is nothing salient in terms of judgement. Yes, the crisis has aggravated existing vulnerabilities, but by how much?
Light on detail
After congratulating itself somewhat on the response to the pandemic, the EC turns its attention to the implications on economic governance following covid-19.
“[The pandemic] has further underlined the challenges facing the economic governance framework and made several of them even more relevant,” write the EC. “Public debt ratios have increased further, highlighting the challenge of a gradual, sustained and growth-friendly reduction to prudent debt levels. Public investment will need to be sustained at high levels for years to come, highlighting the importance of a good composition of public finances to ensure sustainable and inclusive growth.”
Again, this is like grasping at mist. There is a lack of detail, with mention of ‘new lessons learnt from the covid-19 crisis’ but little in fine detail as to what these lessons were, apart from, “The effective policy response has underscored the importance of strong policy coordination, including between different policy and funding tools, and between the EU and national levels.”
But how does one rate ‘strong policy coordination’? How does it differ from its ‘weak’ counterpart? Where on the sliding scale between one and the other does the change occur? All of this is subjective.
Vague and ambiguous
The EC outlines 11 issues and questions that it is seeking to have answered in the consultation. Unlike its preceding assessment of the situation, which seems to define everything on a binary of ‘good’ or ‘bad’, or ‘strong vs. weak’, these questions are open.
It does not take long before it veers back into vagueness. As to how the public debate will be structured, it uses the term ‘various fora, including dedicated meetings workshops, and an online survey’. No specific are available around dates, locations, durations, feedback, or coverage. From there, we know only that the survey itself will end at the end of the year and that further information can be found elsewhere.
And then, after some more flim flam, the whole thing comes to a stop with the promise that “The Commission will provide orientations on possible changes to the economic governance framework with the objective of achieving a broad-based consensus on the way forward well in time for 2023.”
There is one thing that the EC do seem to land firmly on. As to who will participate in the debate, the Commission says that it will look to “[…] the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions, the European Central Bank, national central banks, national governments and parliaments as well as a wide range of stakeholders, including social partners, academia, independent fiscal institutions and national productivity boards”.
I am just glad here that such things are not being left to the public. After Boaty McBoatface, it has been obvious for some time that people cannot be trusted to be consulted on anything.