How policies change in the European Union: Origins and features of the preventive economic surveillance reform

We analyse the process that led to the most comprehensive reform of preventive economic surveillance in the European Union (EU) since 1997. Following a Lasswellian framework, after outlining the fiscal context, the policy context, and the pending policy problems, we investigate the disagreements that emerged during the negotiations and the factors that shaped policymakers’ positions and the outcome. The policy was beset by unobservable and inconsistent indicators, non-compliance, procyclical national fiscal policies, and poor quality of public finances. The reform was centred on a single performance indicator, a longer time frame, and strengthened independent institutions. Amidst pandemic and war, the negotiations focused on three key issues: national flexibility, such as safeguards and exemptions, balance of power between EU institutions, and the role of independent institutions. The status of public finances, the ideological orientation of governments, inter-institutional conflict, and the upcoming elections go a long way in explaining alignments and voting behaviour. 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 contextualising this reform within the previous ones. Old problems may resurface, but in a new guise.