The COVID-19 pandemic and the reordering of EU fiscal governance

REGROUP Research Paper No. 6 (October 2023)

This paper aims to assess the mode of EU fiscal governance that prevailed in the EU’s response to the COVID-19 pandemic. To do so, it examines the role of the European Council in the policymaking process for the establishment of two innovative instruments with fiscal implications for the EU – the Recovery and Resilience Facility (RRF) and the general regime of conditionality (GRC) for the protection of the Union’s budget, both adopted through the ordinary legislative procedure (OLP) of the supranational system. Combining insights from the ‘new intergovernmentalism’ and the ‘emergency politics’ literatures, the paper argues that, in times of emergency, consensus and deliberation become the guiding norms of European integration through the leading role of the European Council even in the context of supranational policymaking. The paper shows that in both cases the European Council exercised quasi-legislative decision-making powers explicitly denied to it by the Treaties, securing a series of political compromises on the two instruments that limited the role of other EU institutions. This contributes to turning the consolidated post-Maastricht paradox of ‘integration without supranational policymaking’ into the new paradox of ‘intergovernmental integration within supranational policymaking’.