With the Eurozone crisis not yet over, Albert Weale, Professor of Political Theory and Public Policy at UCL, reviews the Hertie Governance Report 2015 as it analyses the key issues facing the European Institutions in terms of economic governance. As ad hoc solutions are found to deal with urgent matters, what does this mean for political accountability and reform in the EU, and what lessons have been learnt?
The European financial and economic crisis since 2008 has overturned the normal workings of the central institutions of the European Union. The policies and practices established in the Maastricht Treaty and the Stability and Growth Pact (SGP) have been transformed in a seemingly endless series of improvised measures. National budgetary and economic policy planning are coordinated through the European Semester. Stronger preventive and corrective procedures are in place through a reinforced SGP. Member States now have a treaty requirement to have automatic correction mechanisms for budgetary deficits. The European Stability Mechanism operates as the de facto bailout mechanism for national governments, a function at one time prohibited by the Maastricht Treaty. The European Central Bank is now engaged in outright monetary transactions, a policy that comes close to monetizing government debt. Banking supervision has been reformed.