This is the inaugural lesson of Module 1 of the EUPress Teacher Training curriculum, which addresses the macro-level topic of “Steering the Euro Across the Crises: (2008-2019) and possible evolutions in the coming future”
The objective of this lesson is to examine the reform of European economic governance.
After years of emergency policymaking — from the pandemic to war and inflation — the European Union now faces a harder, structural question: how to rebuild its economic governance to fit a new geopolitical era. The challenge is no longer short-term crisis management, but long-term survival in a world reshaped by power shifts, energy shocks, and digital dependency.
Financing Europe’s Recovery: A Debate Still Unsettled
At the core of this transformation lies the unfinished business of NextGenerationEU, the €750 billion recovery fund that marked the EU’s first large-scale experiment with common debt. The instrument has stabilized economies and strengthened solidarity, yet one crucial issue remains unresolved: how to finance it permanently.
The debate on “own resources” — EU-level revenues to repay the debt — remains open. Without them, the Union risks returning to ad hoc crisis responses instead of building a durable fiscal capacity.
War, Value Chains, and the End of Economic Illusions
Russia’s invasion of Ukraine was not only a geopolitical shock but a turning point for globalization. The war disrupted global value chains that once guaranteed low prices and stable flows of goods. From energy to microchips, the EU discovered how exposed it was to foreign suppliers — including adversarial regimes.
Replacing Russian gas with imports from Africa, Azerbaijan, or Central Asia has brought only partial relief. Prices remain high, and inflation has become the EU’s third major crisis after Covid-19 and war. Rebuilding value chains with trusted partners will take years and cost billions, fundamentally reshaping trade and industrial strategy.
The Return of Fiscal Rules — and the Need for Reform
After being suspended for three years, the Stability and Growth Pact will return on 1 January 2024. The question is what kind of fiscal framework Europe will restore. Strict debt and deficit limits, critics warn, would stifle investment just as the continent needs it most — to finance the green and digital transitions and reduce inequality between member states.
The broader issue is whether national fiscal policies alone can sustain shared priorities. Divergent national capacities — with Germany deploying hundreds of billions in subsidies while Italy and Spain remain constrained by debt — risk deepening economic and political divides.
European Public Goods: From Energy to Defense
Across public opinion and policy circles, there is growing recognition that some challenges — energy, defense, cybersecurity — are European by nature. Studies suggest that a single, interconnected energy grid could cut power prices by up to 30%. Yet national borders, competing interests, and limited coordination continue to block progress.
Calls are also resurfacing for a European defense union — not to militarize the EU, but to provide a coordinated security framework in a changing world. The last attempt, the European Defence Community of 1952, failed. Today, the geopolitical landscape makes such cooperation more urgent than ever.
Digital Dependence and Strategic Autonomy
The EU’s reliance on non-European digital platforms — from Facebook and WhatsApp to TikTok — underscores its technological vulnerability. Recent bans on Chinese apps show growing awareness of data security risks, but they also highlight the absence of homegrown alternatives.
Critical technologies such as semiconductors, AI, and robotics remain dominated by the US and Asia. Europe’s ability to compete in these fields will depend on whether it can develop a coordinated industrial policy backed by shared funding.
A Moment for Change — and a Call for Treaty Reform
For the EU to act effectively at scale, institutional reform may be inevitable. The European Parliament has already proposed revising the treaties, drawing inspiration from the Conference on the Future of Europe, which outlined 49 citizen-driven recommendations for a more efficient and democratic Union.
The window for reform is narrow, but the momentum is there. As the lecturer concludes, Europe faces a choice: strengthen supranational governance and invest collectively in common goods — or risk falling behind global competitors that move faster and act together.
