The European economic policy response to the COVID-19 pandemic has broken new ground for the EU, in terms of its ambition, the tools used, and its institutional characteristics.
A new CEPR Policy Insight by Marco Buti (Director-General for Economic and Financial Affairs) and George Papaconstantinou (Director of STG Executive Education and former Finance Minister of Greece) shows how three sets of factors have shaped this response: an evolving understanding of macroeconomics; the nature of the current crisis; and policy learning from the financial crisis.
The authors review the emerging institutional landscape at the EU level, with its combination of rules-based and institutional features, and assess the critical factors for successful implementation of the Recovery and Resilience Plans at the national level.
Looking forward, Papaconstantinou and Buti describe how the global pandemic has shifted attitudes and redefined ‘successful’ policies across many areas that will likely shape the legacy of the pandemic for European integration. Of particular importance are the newly emerging boundaries between state and market, the notion of subsidiarity in the new environment, reconnecting the EU/domestic with the international/global agenda, and the need for EU economies and policy-making to deal with longer-term structural shifts taking place.
“COVID-19 is forcing us to rethink attitudes and policies across a number of areas that will shape the legacy of the pandemic for European integration,” state the authors.
Whether the response to the pandemic marks a fundamental shift in the paradigm of European integration, or it remains an exceptional one-off resulting from extreme duress, will depend on the EU successfully addressing the shaping factors highlighted in their report.
Read the full report.
Listen to George Papaconstantinou interviewed by Tim Phillips, VoxEu.
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Papaconstantinou and Buti have released a complementary paper as part of the STG Policy Paper Collection: Does the EU ever learn? From the financial crisis to the Covid-19 crisis: looking back to move forward and joined a #FlorenceLive webcast - Europe’s Covid crisis response: what have we learned from the financial crisis? on the topic.