Policy change in the European Union: a Lasswellian framework

Lasswell’s (Reference Lasswell1956) classic attempt to break down how policy decisions are made treats policy change as a process composed of distinct but interconnected functions. We focus on the first three stages of the Lasswellian policy cycle. The first one (intelligence) consists of understanding the context and identifying the policy problems. For our analysis, this is a particularly important stage as we cannot understand the origins of this reform without examining these issues.

The next stage (promotion) is an analysis of the actors advocating for particular courses of action. In the EU context, it is useful to distinguish between a pre-proposal stage, where the Commission signals the need for policy reform, and the other policymakers, such as parliamentarians and ministers, begin to form their positions and to coalesce around preferred solutions, and a post-proposal stage, where conflictual issues come to the open, coalitions solidify, and negotiations officially start. The literature on EU economic governance identifies four clusters of factors that, by order of importance, shape preference formation, coalition building, and decision-making: (i) the fiscal constraints facing the governments; (ii) the ideological orientations of governments and parliamentarians; (iii) inter-institutional conflict at the EU level; and (iv) the proximity to elections. First, countries’ economic and financial conditions shape governmental preferences because they are plausibly associated with the risk of non-compliance with the fiscal rules. Specifically, governments of countries with higher debt-to-GDP ratios are expected to pursue greater national flexibility than those in better fiscal conditions. Studies on past reforms, indeed, report economic divides among governments that support fiscal transfer or fiscal discipline (Lehner and Wasserfallen, Reference Lehner and Wasserfallen2019), or over the enforcement design of the policy (Schure and Verdun, Reference Schure and Verdun2008; Franchino and Mariotto, Reference Franchino and Mariotto2025). Secondly, the ideological positions of governments and institutions, primarily along the left–right dimension, further influence behaviour. This is particularly evident in fiscal governance, where EU rules regulate a key domestic economic policy and involve multiple EU institutions. Left-leaning policymakers are expected to favour greater flexibility and national discretion, plausibly because of their greater proclivity towards public spending, while right-leaning policymakers should prefer stricter rules to limit political manoeuvring at the EU and national level during implementation.Footnote ¹ Thirdly, inter-institutional relations are likely to shape issues and positions. This is exemplified by the tendency of supranational institutions to protect and enhance their prerogatives, against a more reluctant Council, with inter-institutional ideological divides likely to exacerbate the conflict (e.g. Hartlapp, Metz, and Rauh, Reference Hartlapp, Metz and Rauh2014; Bressanelli and Chelotti, Reference Bressanelli and Chelotti2018). Fourthly, electoral pressures, in this specific case, the proximity of the European Parliament’s elections, influence positioning, especially on highly politicised and polarised dossiers such as economic governance. Not only should we expect some posturing from parliamentarians attentive to public visibility and already engaged in campaigning, but the urgency to decide and the uncertainty about the future composition of supranational institutions should induce legislators to reach a compromise sooner rather than later.

In the third and, in our case, last stage (prescription), authoritative choices are made. Laws are passed. Since the reform had to be adopted in accordance with the ordinary legislative procedure,Footnote ² requiring a qualified majority in the Council and a majority in the Parliament, the outcome should approximate the views of the legislators that, being part of the minimal winning coalition, can block adoption and are relatively unconcerned about failure, according to the standard procedural model of EU legislative politics (Tsebelis and Garrett, Reference Tsebelis and Garrett2000). Several analyses portray the German government as the dominant actor in this policy (Heipertz and Verdun, Reference Heipertz and Verdun2010; Schoeller, Reference Schoeller2018), but others doubt this pre-eminence and highlight the counterbalancing act of other governments and institutions (e.g. Schure and Verdun, Reference Schure and Verdun2008; Degner and Leuffen, Reference Degner and Leuffen2019; Leino-Sandberg and Raunio, Reference Leino-Sandberg and Raunio2025). Governments may benefit from their proximity to the position of the Parliament, since the assembly should be able to exercise some influence in this procedure (Franchino and Mariotto, Reference Franchino and Mariotto2025), limited as it may be, as Bressanelli and Chelotti (Reference Bressanelli and Chelotti2018) show for the 2011–2013 reform.

The literature on EU economic governance is well-established, but the most recent studies focus primarily on fiscal capacity (or lack thereof) (Buti and Messori, Reference Buti and Messori2023; Wozniakowski et al., Reference Wozniakowski, Zgaga and Fabbrini2023; Spielberger et al., Reference Spielberger, Hodson, Howarth and Mugnai2025). Only a few works pay attention to the negotiations and the strategic interactions between national and European actors (Cochrane, Reference Cochrane2025; Franchino and Mariotto, Reference Franchino and Mariotto2025; Leino-Sandberg and Raunio, Reference Leino-Sandberg and Raunio2025). None covers this recent reform.

In the next section, we begin our investigation of the first stage of the Lasswellian policy cycle by analysing the fiscal context policymakers faced.Footnote ³

The fiscal context: high debt and differentiation

Compared to the pre-2007 period, the fiscal performance of the EU after the European sovereign debt crisis is characterised by high overall levels of public indebtedness and significant differentiation among the states, especially within the euro area. Figures A1 to A3 in the Online appendix illustrate these developments. The legislative measures, known as Six-pack and Two-pack, adopted in 2011 and 2013 to address the crisis, specified that the Commission had to produce a report on their application by December 2014 and every 5 years thereafter. In the year of the first report, the debt-to-GDP ratio reached a peak of 86.6 per cent in the EU as a whole (93 per cent in the euro area). It then began to recede gradually to a low point of 77.5 per cent in 2019 (83.9 per cent in the euro area) – a reassuring dynamic, even though the overall average was still more than 10 percentage points higher than the pre-2007 period. Then another crisis hit the continent. In the first quarter of 2021, a year into the pandemic, the ratio reached a zenith of 91.5 per cent in the EU and 98.8 per cent in the euro area. When the Commission sent its reform proposals to the Parliament and the Council in April 2023, the ratio was still 81.7 per cent in the EU and 88.6 per cent in the euro area. More worryingly, the heterogeneity in fiscal performance across states remained stubbornly higher than in the pre-crisis period, especially in euro area countries. Despite the downward trajectory from the all-time peak reached in the first quarter of 2021, when ministers and parliamentarians began the official negotiations in 2023, there was hardly any robust evidence of reaching the level of homogeneity experienced in the 2000s. In sum, higher overall public debt levels and stubborn differentiation were the fiscal context legislators had to confront.

Pending policy problems

There were three main sets of problems that emerged from the post-crisis implementation of the policy: unobservable and inconsistent indicators, compliance with the country-specific recommendations, and the quality and procyclical nature of national fiscal policies. First, over the years, preventive surveillance evolved into a system that used multiple, sometimes inconsistent, indicators. The linchpin was the structural balance, adopted in the 2005 reform, which is not directly observable and is frequently revised. In other words, “governments agreed to a preventive surveillance based on an imprecise indicator over which they had limited control” (Franchino and Mariotto, Reference Franchino and Mariotto2025: 118). Equally problematic, the panoply of rules gave rise to inconsistent guidance, “for instance, rules more oriented towards sustainability may imply stricter fiscal requirements than rules that are more geared towards stabilisation” (European Fiscal Board, 2019: 27). This often produced substantial delays in achieving budgetary targets, particularly the medium-term objective, and offered opportunities for governments to choose the less demanding objective in their compliance efforts (European Court of Auditors, 2018: 102). Inconsistent rules also raised questions about transparency and equal treatment of countries. According to the European Court of Auditors (2018), the resulting discretionary flexibility in implementation allowed for an increase in unrelated expenditures, thus undermining preventive surveillance.

Secondly, compliance with country-specific recommendations, the main tool of preventive surveillance, was particularly discouraging. Since the introduction of the European Semester, less than 60 per cent of these recommendations have been at least partially implemented by the member states (Franchino and Mariotto, Reference Franchino and Mariotto2025). In no small part, this was due to the annually based cycle of drafting and implementing the stability and convergence programmes – the core national documents on which preventive surveillance was founded – and assessing compliance with the recommendations. Widespread non-compliance eroded the credibility of the policy. The process may also have engendered obfuscatory behaviour, therefore reducing transparency, and the effectiveness of the European Semester (European Court of Auditors, 2020). Eventually, it undermined the purse of fiscal discipline (European Court of Auditors, 2018; Network of Independent Fiscal Institutions, 2021).

Lastly, procyclicality was a serious problem, especially in highly indebted countries. During the 2000s, countries failed to build fiscal buffers despite a favourable economic environment. The European Fiscal Board damningly stated that “[t]here has not been any case of aggregate counter-cyclical fiscal contraction in good economic times” (2019: 56). Then, when the economic crisis hit, the governments had to consolidate. And they did it badly. Consolidation efforts were concentrated disproportionately on public investment rather than public consumption and transfers (European Fiscal Board, 2019: 71–80). This is particularly concerning in light of the resources required to address the environmental, security, and social challenges facing the continent. The Board highlighted “the need to incentivise Member States under an EDP [excessive deficit procedure] to protect public investment rather than cutting it with the aim to exit the EDP as soon as possible” (2019: 6).Footnote ⁴ Although these outcomes are primarily the result of national policy choices and there is no clear evidence that fiscal rules actually hampered investment, at least according to the Commission (2020: 10), some rules, such as the debt reduction benchmark in the corrective regulation (the so-called 1/20th criterion used to assess whether an excessive debt was diminishing at a satisfactory pace), exhibited a procyclical bias, especially in highly indebted countries (European Fiscal Board, 2019: 25–55).

The policy context: reform amidst pandemic and war

The initiative to reform the SGP reflected persistent concerns about the performance, legitimacy, and internal coherence of the governance framework. These considerations informed the first round of discussions triggered by the Commission’s communication in early 2020. In this initial attempt, the Commission acknowledged both the substantially altered macroeconomic context and the limited success of existing rules in reducing debt levels in several vulnerable member states. The communication identified key issues for public debate: the appropriate balance between long-term sustainability and short-term stabilisation; the simplification and transparency of the framework; and the strengthening of enforcement mechanisms, including financial sanctions, reputational costs, and positive incentives, in coordination with national fiscal policies (European Commission, 2020).

However, as the pandemic spread throughout Europe, on 23 March 2020, the Council’s finance ministers agreed with the Commission’s assessment to activate the general escape clause. The clause allowed for temporary departure from the budgetary objectives in case of severe economic downturn in the euro area or the Union as a whole, and provided member states the flexibility to support the healthcare system, employment, and economic activity. The Commission also suspended its broader reform agenda. The policy response of the EU was swift and significant. In addition to three initial safety nets for workers, businesses and countries, on 21 July 2020, the EU leaders adopted the NextGenerationEU (NGEU), an unprecedented post-pandemic economic recovery facility which deployed more than 800 billion euros through grants and loans over the 2020–2026 period. To benefit from the scheme, governments had to submit national recovery and resilience plans (NRRP), outlining the reforms and investments to implement, with targets and milestones. The actions in the NRRP intersect with the country-specific recommendations under the European Semester framework for the coordination of economic and social policies, a key feature of economic governance. NGEU represents the largest stimulus package ever financed by the EU. Together with counter-cyclical discretionary fiscal policy, it has proved highly effective in cushioning the impact of the crisis and addressing the major investments required by the environmental and digital challenges facing the continents. It also highlighted the pressing need to build fiscal buffers in normal times for deployment in times of crisis (European Commission, 2021).

Then, in February 2022, the Russian invasion of Ukraine reshuffled the deck. Uncertainties about energy supply and security threats, especially in countries geographically close to the conflict, adversely affected economic performance, and countries required additional investments to diversify energy sources and build up defence capabilities.

Pre-proposal advocacy: the road to the reform

Modified contexts and lingering problems set the scene for the promotion stage of the policy cycle, where policymakers began to advocate for particular courses of action. The debate was reignited in October 2021, when the Commission reassessed the need for reform in a profoundly different macroeconomic and geopolitical environment (European Commission, 2021). During this second phase of the discussions, contributions converged on and sought solutions to the three core problems outlined above. On indicators, a broad agreement on simplifying the rules was emerging. A few months prior, in a resolution of July 2021, the European Parliament noted the need to rebuild the fiscal framework on a single indicator of fiscal performance, as recommended by the European Fiscal Board (European Parliament, 2021). In December 2021, Mario Draghi, the Italian prime minister, and Emmanuel Macron, the French president, leaders of two of the most indebted countries in the euro area, called for the need to simplify the rules because they were “too obscure and excessively complex,” but also demanded more national leeway: more differentiation of consolidation efforts, according to fiscal sustainability needs, and the promotion of structural reforms with the aim of expanding public investment (Draghi and Macron, Reference Draghi and Macron2021). In an unprecedented and unexpected convergence of views, Nadia Calviño and Sigrid Kaag, the Spanish and Dutch finance ministers respectively, not only agreed on “simple expenditure rules,” but they also advocated “substantial public investments [which] will be essential to attract private investments in strategic areas” and indicated, in line with the 2019–2024 Commission priorities and the Parliament’s resolution, that such investments should “ensure a sustainable and just transition” (Calviño and Kaag, Reference Calviño and Kaag2022). It was an attempt at building bridges to overcome the bitter divisions that characterised the 2011–2013 reforms when Spain was quite unfairly characterised as a profligate country despite a public debt trajectory that was better than Germany’s at the onset of the global financial crisis. The fact that Sigrid Kaag was from the Democrats 66, a pro-European party and the most left-leaning member of Mark Rutte’s coalition, and the Spanish government was led by the socialist Pedro Sánchez must have also played a role.

Meanwhile, in Germany, Olaf Scholz’s heterogeneous Ampelkoalition between the Social Democratic Party, the Free Democratic Party (FDP), and the Greens was experiencing internal convulsions. In August 2022, the German Federal Ministry for Economic Affairs and Energy, headed by Robert Habeck for the Greens, proposed a set of principles to guide the German government in the negotiations (Bundesministerium für Wirtschaft und Energie, 2022). The document signalled a willingness to reform the policy, which was not a given. With qualifications, it supported several recommendations of the European Fiscal Board (2019), such as the need to simplify the rules, although not as far as dropping the medium-term objectives, to gradually reduce high debt levels, thus suspending the 1/20th criterion, to build fiscal buffers, to improve the quality of public finances and enforcement, and to preserve multilateralism. The document recommended making the European Fiscal Board independent from the Commission and even went as far as supporting a conditional expansion of investment-related exemptions, such as those related to EU spending programmes. As aptly observed by Vallée (Reference Vallée2022: 1), “the paper reflects a desire of the Greens to rein in Free Democrat (FDP) Finance Minister Christian Lindner.” Indeed, as we shall see, we suspect that Lindner, who would have been in charge of the upcoming negotiations, may not have entirely welcomed such an encroachment on his turf.

The Commission’s communication of November 2022 represented a turning point. It consolidated the main insights from the debate and set out the key orientations for the forthcoming reform proposal. The communication placed renewed emphasis on flexibility, a longer time horizon, and enforcement. Fiscal governance should have a temporal dimension that integrates “fiscal, reform, and investment objectives into a single holistic medium-term plan” for national fiscal policies. At the same time, the Commission envisaged a “new EU enforcement tool,” designed to “ensure the enforcement of Member States’ reform and investment commitments underpinning a more gradual fiscal adjustment” (European Commission, 2022: 6). This design would reconcile public debt sustainability with the promotion of sustainable growth through investment and reform. While maintaining the reference values of 3 per cent of GDP for deficits and 60 per cent for public debt, unobservable and uncertain indicators and unrealistic debt reduction benchmarks would be replaced by a net primary expenditure path covering at least four years. To comply with this path, member states would have to submit medium-term structural plans, replacing the previous stability and convergence programmes as well as the national reform programmes. These plans would then be assessed by independent fiscal institutions, which should be strengthened as recommended by the European Fiscal Board and the European Parliament. However, the Commission was cautious and refrained from endorsing exemptions for expenditures in green and digital transition, as no consensus had emerged on this issue during the public debate and among national governments (European Commission, 2022).

The Commission also made clear that the review clause would be deactivated starting in 2024 and expected governments to reach a broad consensus by 2023. The risk of returning to the old adjustment paths, vigorously opposed by the most indebted countries, sped up negotiations. Uncertainties about the approaching European elections added further momentum. The new Parliament and Commission might not have been equally keen to support greater flexibility, a prospect especially troubling for states with weaker public finances. These dynamics culminated in the conclusions of the Economic and Financial Affairs Council of 14 March 2023. Ministers agreed to a large extent with the Commission, but also identified pending and unclear issues. Specifically, the conclusions called for a clarification of the technical trajectory and its methodology, which should be “replicable, predictable and transparent,” and recommended exploring safeguard provisions that ensure “sufficient debt reduction and prevent backloading of fiscal efforts” (Council of the European Union, 2023).

Dissatisfied with the excessive flexibility proposed in the Commission’s communication and, probably with the vagueness of the Council’s response, the German Ministry of Finance released, the following month, a non-technical paper arguing for “quantitative targets as a minimum requirement to ensure sufficiently declining deficits or to maintain deficits at prudent levels” (Bundesministerium der Finanzen, 2023). It further added that “debt sustainability analysis as main instrument to define deficit ceilings or expenditure paths is not the appropriate tool,” suggesting numerical limits based on the structural balance. Last, to ensure sufficient debt reduction, the paper proposed common safeguards requiring an annual reduction of at least 1 percentage point for highly indebted countries, and 0.5 percentage points for moderately indebted ones, but still above the 60 per cent threshold. Recent electoral setbacks for the FDP and differences within the Ampelkoalition, must have played a role. Just one day before the Commission issued its proposal, Lindner (Reference Lindner2023) published an op-ed underscoring these points. He criticised the executive’s bilateral approach to defining national debt-reduction plans, arguing that this would undermine “equal treatment among member states” and ultimately jeopardise the objectives of the fiscal framework.

At this early stage already, the actions that ministers were advocating are consistent with our expectations about the fiscal and ideological correlates of policy positions. But we can test our expectations more comprehensively once the proposal is tabled, since conflicts come out in the open and coalitions solidify.

Post-proposal negotiations: conflictual issues and coalitions

The proposal that the Commission submitted to the legislators in April 2023 was based on three core pillars. First, net expenditure becomes the sole operational indicator for setting national fiscal adjustment paths, anchored on debt sustainability, and for carrying out annual surveillance. Medium-term objectives, based on the structural budget balance, and criteria with a procyclical bias, such as the debt reduction benchmark, are therefore dropped. Secondly, surveillance revolves around national medium-term fiscal-structural plans, rather than annual stability or convergence programmes. Thirdly, national independent fiscal institutions are involved in the monitoring of the implementation of the plans.

These major innovations were designed to address the problems listed above. Legislators did not fundamentally challenge the new policy design. Indeed, as we said earlier, there was consensus within the Council on the simplification of the rules and the extension of the time horizon. But that is about it. The proposal did not sail smoothly through the legislative branches. Negotiations focused on three key issues: national flexibility, balance of power among EU institutions, and the role of independent fiscal institutions. The first two are recurrent themes that have characterised past reforms (e.g. Franchino and Mariotto, Reference Franchino and Mariotto2025: 45–124). The last is a new interesting development.

Within a few months of the proposal submission, the positions within the Council congealed into two camps. The undeniable leader of the first group was Christian Lindner, who, by mid-June, assembled a coalition of ten colleaguesFootnote ⁵ concerned about the laxity of the proposal (Lindner et al., Reference Lindner, Stanjura, Brunner, Vassilev, Lose, Primorac, BoštjančičK, Skaist˙e, Ašeradens, Võrklaev and Backes2023). They demanded minimum numerical annual debt reduction targets, differentiated by levels of public indebtedness, to be achieved within a country’s regular legislative term, in order to avoid postponement of fiscal adjustments. They also felt that the proposal conferred far too much leeway on the Commission. The implementation of the policy would be excessively based on bilateral negotiations between the supranational executive and each state, undermining multilateralism, at the risk of unequal treatment of countries,Footnote ⁶ poor compliance, and eventually fiscal profligacy. Finally, the proposal lacked sufficiently robust provisions to ensure the building of fiscal buffers.

The opposite camp, building on the joint position expressed by the French president Emmanuel Macron and the Italian prime minister Mario Draghi back in 2021 (Draghi and Macron, Reference Draghi and Macron2021), was led by the French minister of the economy Bruno Le Maire, from Macron’s party LREM. This group was much more pleased with the Commission’s proposal. They emphasised the need to allow for national flexibility to make room for public investment and were sceptical of uniform, automatically applied numerical targets, which were considered too rigid, at risk of procyclicality and undermining national differentiation. Both the Belgian and, more lukewarmly, the Irish ministers displayed some support for this position.

As negotiations progressed, the issue of exempting investment in defence became particularly salient for the Baltic countries and Poland, as prospects of a ceasefire in the Russian–Ukrainian war faltered and the threat to their security showed no signs of receding. The new right-wing Italian government also sought to include provisions safeguarding national expenditures on projects that were financed by the post-pandemic Recovery and Resilience Facility. Both issues were received coldly by the more hawkish governments.

In line with our expectations, the public debt of a country (a plausible indicator of the risk of non-compliance) and, secondarily, the left-right orientation of a government go a long way into explaining the composition of these coalitions. Three of the four governments whose countries’ public debt exceeded 100 per cent of GDP were in the flexibility coalition. The fiscal position was clearly a more important factor than the ideology in France and Italy, whose governments were right-leaning. Of the remaining two countries with high debt ratios, the left-wing Spanish government had to act as an honest broker, as it was presiding over the Council in the second semester of 2023. In Greece, the debt-to-GDP ratio decreased by a remarkable 45 percentage points between 2020 and 2023, the fastest rate in the EU. The right-leaning government of Kyriakos Mitsotakis, newly established after a convincing victory in the election of June 2023, may not have been keen to join in. Lastly, considering the country’s very solid fiscal position, Irish support of the Commission’s proposal could be explained by the rather centrist views of Leo Varadkar’s government.

On the other hand, the average debt-to-GDP ratio of the eleven countries whose ministers signed the op-ed in Die Welt (Lindner et al., Reference Lindner, Stanjura, Brunner, Vassilev, Lose, Primorac, BoštjančičK, Skaist˙e, Ašeradens, Võrklaev and Backes2023) was merely 44.9 per cent in 2023. Austria, with a ratio of 77.8 per cent, was the worst performing. Most of these governments were centrist or centre-right, with the interesting exceptions of Germany and Slovenia. In these relatively heterogeneous coalitions, who held the finance portfolio mattered. As we said, Lindner’s leadership made the difference in Olaf Scholz’s rather left-leaning, but fractious, coalition. In Slovenia, the portfolio was held by Klemen Boštjančič of Freedom Movement, the most conservative party in this left-leaning coalition. In October 2023, the governments of Finland, the Netherlands, Sweden, Portugal, and Slovakia expressed their views in favour of adopting safeguards. They all had solid public finance positions and the first three right-of-centre governments. Portugal was one of the top three best-performing countries in terms of debt reduction. The debt-to-GDP ratio diminished by a considerable 37 percentage points between 2020 and 2023. This may explain the position of António Costa’s socialist government. In Slovakia, the Euroscepticism of Robert Fico’s cabinet may have played a role.

Time to decide: explaining the outcome

We move now to prescription, the formal decision stage of the Lasswellian framework. The preventive surveillance envisaged in the proposal submitted by the Commission was less demanding and intrusive. This was clear well before official negotiations began. Already in February, concerned about the direction the debate was taking, the Austrian state secretary Florian Tursky of the Austrian People’s Party (ÖVP) expressed no great qualms about relying on the old rules (Allenbach-Ammann, Reference Allenbach-Ammann2023). Lindner was more accommodating, but a couple of months later, he made clear that changing the rules was not advisable unless significant improvements were made (Lindner, Reference Lindner2023). Failure would not have been a great problem for governments that preferred stricter oversight. Although the signatories of Die Welt op-ed (Lindner et al., Reference Lindner, Stanjura, Brunner, Vassilev, Lose, Primorac, BoštjančičK, Skaist˙e, Ašeradens, Võrklaev and Backes2023) would not have been enough to form a blocking minority, the addition of the Finnish and Dutch votes or of the sole Spanish vote would have sufficed. If we take the debt-GDP ratios in 2023 as a proxy for measuring a key conflict dimension and reasonably assume that governments of countries with higher debt were more supportive of the reform, the pivot for reaching a qualified majority in the Council would be the Polish government, with a ratio of only 49.5 per cent. The next euro area government is Slovakia, with 55.8 per cent. Germany, with 62.3 per cent, is not too far, which explains the key role it played in coalition dynamics as well as the credibility of Lindner’s threat to block the reform. Interestingly, if we equate this loosening proposal to a leftward shift, the pivotal government is the French one with a rather right-of-centre position. But this dimension played only a secondary role in these negotiations.

The population-weighted average position of governments in the Council was rather right-of-centre in 2023. Only six of the 27 governments were clearly left-wing. Instead, the first von der Leyen Commission was more centrist than the Council. Eleven commissioners were associated with the European People’s Party group, eight with the socialists, and five with the liberals. More importantly, the commissioner for economic affairs was the Italian Paolo Gentiloni of the left-leaning Democratic Party (PD). The composition of the Parliament was similar. In the 2019 elections, the pro-EU liberal and green parties and the anti-EU right-wing populist parties made substantial gains against the main centre-left (S&D) and centre-right (EPP) party groups. The median member was from the centrist-liberal Renew Europe group. Their term was, however, coming to an end. The elections of June 2024 would eventually deliver a rightward anti-EU shift at the expense of these centrist parties, and the median member would shift to the conservative European People’s Party group. With this political context in mind, we now analyse how these issues were resolved.Footnote ⁷

Conclusion: new design, old problems

We used a Lasswellian framework to investigate the origins and features of the most comprehensive reform of preventive economic surveillance since 1997. Persistent policy problems and a worsening post-pandemic fiscal context, combined with security challenges, spurred policymakers into action. The conflictual issues, centred on national flexibility and institutional balance, divided policymakers primarily along national fiscal positions and ideological differences, with institutional interests and electoral pressures playing a secondary role. The final design approximated the view of the coalition of governments that could block the reform and were less concerned about failure.

We conclude by taking a broader view and contextualising this reform within the previous ones.Footnote ¹¹ Some previous trends continue: the number of provisions in force increases, the centrality of the Council is reinforced, and states are given greater flexibility in implementation. The Council now endorses the plans and their revisions. It permits states to deviate from their net expenditure path and recommends actions in the case of non-compliance. The nature of national flexibility also changes. Provisions specifying the conditions under which member states were allowed to depart from their budgetary objectives are now replaced by provisions primarily related to the submission and revision of plans and the relations with the independent fiscal institutions. Other trends stall, or even reverse. The Commission’s policy prerogatives do not change much. It could even be argued that its role is somewhat diminished. For instance, the requirement of a simple majority in the Council to reject a recommendation establishing that no effective action has been taken, in the case of persisting non-compliance, has been dropped. On the other hand, the Commission has the power to appoint members of the reformed European Fiscal Board. Finally, while enforcement remains centred on the Council, the share of enforcement-related provisions has decreased. This underlies the general nature of this reform. Previous modifications focused on enforcement because they were primarily triggered by non-compliance. This last reform is a general reorganisation of the principles and the procedures governing preventive surveillance.

To conclude, as old problems are addressed, new ones are likely to emerge, or better, old problems may resurface but in a new guise. At least two issues look problematic. First, since the debt sustainability analysis that informs the net expenditure path relies heavily on assumptions about the temporal trajectory of economic variables such as growth, interest rates, and inflation, which are, moreover, not exogenous to political decisions, “[t]echnical analysis and policy judgement cannot be neatly separated,” as Heimberger (Reference Heimberger2023: 8) puts it in an report for the European Parliament. Such separation is the holy grail of the naive. And it is probably for the better, as one would not want a straitjacket policy that prevents policymakers from adapting to unforeseen, or even foreseeable, challenges. Secondly, about compliance, whether the involvement of national stakeholders will be effective or perfunctory, and whether independent advice will be heeded or ignored are open questions. Quite a few factors shape public spending. Building fiscal buffers in good economic times is not a main one, as the political economy literature shows. Nevertheless, whether circumstances change or remain the same, stronger independent institutions – both national and supranational – can play a valuable role in policy evaluation, ensuring that sound performance is duly recognized while responsibility for poor fiscal outcomes is appropriately assigned.