The last decade for Europe is one that was marked by multiple crises. Between 2009 and 2019, the term austerity dominated every discussion about the economy. The dominance of austerity in the Eurozone crisis years created the impression that there was something fundamentally different compared to previous episodes of politics in hard times. While in the past European governments would pursue different crisis-response strategies, this time all Eurozone governments settled for a policy of fiscal consolidation. They justified the strategy by arguing for fiscal responsibility, for which their citizens severely punished them at the subsequent elections.
The narrative of fiscal responsibility also characterized the reform of European economic governance, particularly with the strengthening of the Stability and Growth Pact. These developments raised the concern that under the conditions of deepening European integration, national governments are structurally induced to increasingly base their actions on ‘responsible’ policy-criteria and to consequently neglect responsiveness towards the demands of domestic socio-economic groups. To what extent has this scenario actually unfolded?
The balance between responsiveness and responsibility is a fundamental element of governments’ legitimacy. As argued originally by Jonas Linde and Yvette Peters, by being responsive governments build a ‘reservoir of goodwill’ that helps them gaining citizens’ trust to take unpopular but necessary measures in times crisis. These unpopular measures are then justified with arguments about responsibility for the country’s long-term needs. Following this logic, after a period of responsibility, governments need to focus again on responsiveness to regain citizens’ trust. In the sphere of budgetary policy, responsiveness is about giving resources to domestic socio-economic groups via expenditure increases or tax reductions, while responsibility is about guaranteeing the long-term stability of public finances.
As the austerity of the Eurozone crisis years generated widespread popular discontent, governments were in bad need to regain citizens’ trust. The question therefore is whether after the threat sovereign debt crisis started fading, under the new European economic governance governments have been able to redirect their budgetary policies towards policy goals that are responsive to domestic socio-economic needs.
The evidence stemming from a comparative analysis in countries as diverse as France, Germany and Spain, reveals that fiscal responsibility was the dominant policy-criterion only between 2010 and 2014, and that subsequently governments started framing and shaping their budgets according to responsive criteria. The pattern unfolds relatively homogenously across the three cases. The post-crisis increase of responsiveness is only partially limited by a country’s deficit levels or its credit ratings. This suggests that the European budgetary agreements do not structurally impede governments to be responsive, even when their debt and deficit levels exceed the prescribed thresholds. In other words, also in Spain and France – which brought their deficit levels within the -3% threshold only in 2017 – responsiveness in domestic budgetary policies started increasing already from 2014 onwards.
These findings confirm the importance of ideas in shaping the austerity of the early 2010s. While the logics of austerity were common to governments of all particular colours, centre-right governments appeared more determined in asserting this policy-approach. Interestingly, during the crucial winter of 2011/2012 – during which governments agreed on key decisions for the Eurozone – the governments of the Eurozone’s largest countries were composed of fiscally conservative forces, among which the German finance minister played a leading role. The austerity of the early 2010s seems thus to be a political choice and not structurally driven.
This, in turn, offers new perspectives on the future development of European economic governance and integration in general. Simply said: it matters which political forces sit in the driving seat at the moment of key decisions. It can thus be no accident that during the current Covid-19 crisis fiscal responsibility is framed differently than ten years ago, with the growing spread of the idea that public investments can be the key to ensure the long-term sustainability of public finances. This change cannot be seen loose from the different political composition of the current governments than those of the early 2010s. This calls for deeper reflections about how party-alternation in national governments shapes the policy-directions agreed at the European level.
On a final note, it is worth reflecting on the legacy of the extensive austerity of the early 2010s for the trust between governments and citizens. Despite the high levels of responsiveness in the second half of the decade, governments still struggled with large popular discontent, with for example the Macron presidency being confronted with the gilet jaunes, or the German finance minister Olaf Scholz struggling to win the support of the voters of the social-democratic party. Various successive years of austerity have possibly drained the reservoir of goodwill between citizens and governments, and it will take a substantial amount of responsiveness towards social demands to win that confidence back. The recently agreed Recovery Fund in response to the Covid-19-induced recession could be an important step in this direction. And again, the choice for this policy cannot be seen loose from the political composition of the governments at the beginning of this new decade.
This blog post draws on the JCMS article ‘This Time Wasn’t Different: Responsiveness and Responsibility in the Eurozone between 2007 and 2019’
Johannes Karremans is currently Research Fellow at the European University Institute in Florence. Previously, he was post-doctoral researcher at the University of Salzburg, holding a Lise Meitner grant from the Austria Science Fund with the project entitled “Responsive versus responsible: A comparative study of budgetary discourse in the Eurozone”. Johannes holds a PhD from the European University Institute (2017). His research has appeared in the Journal of Common Market Studies, the Journal of European Public Policy, Party Politics and West European Politics.