Ian Cooper (Dublin City University)
What are the Commission’s priorities for EU economic policy over the next five years? The institutions of the EU are currently in the quinquennial period of interregnum between the election of the new European Parliament (which happened in June) and the new European Commission taking office (which will most likely happen in December). Ursula Von der Leyen has chosen the nominees for her second college of Commissioners, who must be grilled at EP hearings in November before they can get down to work.
The Commission’s priorities for EU economic policy for the next five years are set out – at least initially – in the Political Guidelines published in July. Under the heading, “A new plan for Europe’s sustainable prosperity and competitiveness,” the Political Guidelines set out a miscellany of policy proposals to boost business, the Clean Industrial Deal (green transition), productivity, research and innovation, investment, and skills; and under the heading, “Supporting people, strengthening our societies and our social model,” they sets out various social policy goals related to jobs, housing, cohesion, youth and gender equality.
These priorities were further elaborated in September when Von der Leyen unveiled her newly-structured Commission, and it was reflected in the mission letters to the Commissioners-designate. She also signalled her intention to borrow heavily from the policy ideas of two former Italian prime ministers, specifically as found in Mario Draghi’s report on competitiveness as well as in Enrico Letta’s report on the single market.
Of course, the plans of a new Commission are indicative but hardly determinative. In the political system of the EU, the Commission’s role is to propose legislation, which must subsequently be enacted by the European Parliament and the Council; this gives it more agenda-setting than decision-making power.
Moreover, economic plans can be blown off course by unforeseen events. The Political Guidelines of 2019 included an elaborate economic programme for An Economy that Works for People. However, just a few months after the new Commission assumed office, the EU was hit by the Covid-19 pandemic which had a devastating impact on the EU economy. The Commission’s entire economic policy-making apparatus was commandeered for the purpose of devising a multifarious pandemic rescue and recovery package (studied extensively by the Jean Monnet Centre of Excellence REBUILD) Still, while many of its original economic plans had to be put aside, some were adapted and repurposed as pandemic rescue measures.
One little-noticed policy idea in the 2019 Political Guidelines, within a section on “Europe’s Social Pillar,” was to propose a European Unemployment Benefit Reinsurance Scheme. At the height of the pandemic in April 2020, this idea was pulled from the shelf to be put into practice on an emergency basis as the programme known as SURE (Support to mitigate Unemployment Risks in an Emergency). SURE helped to preserve millions of jobs during the pandemic by providing low-interest loans to member states in support of national job retention schemes. In fact, with a value of 100 billion euro, SURE – a temporary programme which ran until 2022 – was the largest single social policy intervention in the history of the European Union.
The central element of the pandemic recovery programme was NextGenerationEU, a 750 billion euro package of grants and loans agreed by the European Council at a marathon summit meeting in July 2020. This massive spending programme was a response to an unforeseen emergency, but it actually gave financial support for many of the pre-existing policy priorities of the Commission, most notably the Green and Digital transitions, that were not directly related to the pandemic.
The largest unresolved economic policy question hanging over the next Commission concerns the future of NextGenerationEU. The current 7-year programme will expire in the middle of the 2024-2029 mandate, and it is unclear whether it will be renewed or perhaps replaced with a similar programme. NextGenerationEU was greeted by some as a “Hamilton moment” for the EU in that it represented an unprecedented pooling of fiscal policy in the EU, similar to what occurred in the US in the 1790s. However, it was in the first instance a temporary programme. To make a permanent programme along these lines would probably require a change to the EU treaties. This is perhaps the thorniest question that will confront the EU during the mandate of the next Commission.
Ian Cooper is a Senior Research Fellow at the DCU Brexit Institute.
The views expressed in this blog post are the position of the author and not necessarily those of the Brexit Institute blog.