From renegade solution to 'star' policy: what led to the issuance of joint debt in the EU
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Keywords
European Union; crises; joint debt issuance; COVID-19
Abstract
In 10 years of crises in the European Union (EU), the responses given to the financial recession of 2008 and to the economic consequences of the pandemic of COVID-19 in 2020 are different: from austerity we have moved to solidarity. This change in EU direction was possible because member states, who decide the path of policy in the EU, agreed to jointly issue debt to finance the post-crisis recovery from COVID-19, a solution rejected in the 2008 financial crisis. This research aims to understand why this happened, looking at "What has changed in 10 years of EU crises for joint debt issuance in the EU to go from being rejected by member states to being seen as a 'star' policy". Using existing literature on the policy-making process in the two crises, media content and public opinion studies, I argue in this essay that, in the response to the COVID-19 crisis in contrast to the previous recession, weighed a number of factors such as the change in the behaviour of member states during the negotiations with the revival of the Franco-German axis in favour of joint measures; the impacts of the pandemic that motivated more solidarity among the 27; the need to resolve consequences of the previous recession; the results of the years of austerity that generated social unrest, Euroscepticism and politicisation; the prevention of worsening the democratic deficit in the EU; and also the influence of the media to common decision-making. The innovation I bring lies in the analysis of the response to this unknown phenomenon, the pandemic crisis, by 27 sovereign states abdicating their exclusive competence in the budgetary area to move forward with the issuing of joint supranational debt, in a common interest in responding to the economic consequences that contrasts with the intergovernmental response given to the previous recession. Since it has been successful in economic terms and it has been accepted by public opinion, this is now a 'star' policy in the EU.
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