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Make-up of fiscal integration in the European Union

Strezhneva M.V.,

Primakov National Research Institute of World Economy and International Relations (IMEMO), Russian Academy of Sciences, Moscow, Russia, m.strezhneva@imemo.ru

elibrary_id: 251783 | ORCID: 0000-0002-6561-4367 | RESEARCHER_ID: K-5421-2013

Article received: 2023.11.07. Accepted: 2024.01.09


DOI: 10.17976/jpps/2024.02.11
EDN: XOXAMT

Rubric: Orbis terrarum

For citation:

Strezhneva M.V. Make-up of fiscal integration in the European Union . – Polis. Political Studies. 2024. No. 2. https://doi.org/10.17976/jpps/2024.02.11. EDN: XOXAMT (In Russ.)

Abstract

The present article aims to expose current trends in fiscal integration in the EU. Its milestones are brought forward, with particular attention being paid to the “NextGenerationEU” recovery plan, the latter constituting Brussels' key response to the socio-economic crisis caused by the COVID-19 pandemic. The article evaluates whether this program is going to remain a temporary phenomenon and to what extent it can define the “new normal” for the Economic and Monetary Union. Due to the Ukrainian crisis, the suggestions are spelled out more insistently to provide Brussels with “fiscal capacity” or permanent fiscal mechanisms that could repel emerging challenges and threats. The question that is considered here is whether we can expect such perpetual tools to become future elements of a full-scale fiscal union, bringing the euro area closer to the contours of an optimum currency area. The influence of European institutions as initiators of the integration process and the involvement of non-governmental players in it have received wider coverage in the specialized literature. Thus, in this case the role played in the process of fiscal integration by national governments is explored in more detail. For this purpose, the theory of multilevel governance and, in particular, its “dynamic” version are applied. It proves useful for identifying cases and ways in which governments can maintain control over decisions made within the integration system. The analysis confirmed that the Union has no plans to increase the issuance of the EU debt in order to replace national borrowing, or to transfer taxes from the national to the supranational level. It can be expected that in the future more active EU borrowing in financial markets will be accompanied by the measure of institutional flexibility which has now been achieved due to an intergovernmental compromise. At the same time temporary tools like NGEU and SURE are unlikely to lead to the fiscal union being completely federalized.

Keywords

fiscal integration, fiscal union, multilevel governance, optimum currency area, federalization, European stability mechanism, Recovery and Resilience Facility, the EU's own resources .

 Full Text

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