Institutional Dynamics of Fiscal Integration in the European Union

Reacting to the economic shock caused by the spread of the Coronavirus, the European Union suspended for 2020–2023 its rules for national budgets and adopted in 2020 a one-off Next Generation EU (NGEU) programme in addition to the general multiannual budget. The latter made it possible to finance major measures, primarily supporting the Grean Deal and digitalisation. The debate on the prospects for fiscal integration has intensified in expert circles as a consequence. In practical terms, the article aims to examine whether this will result in Brussels abandoning its commitments to strict fiscal discipline in the longer term. To better understand how the actualities thus described go together in European practice, constructivist theory and, in particular, discursive institutionalism is employed. It allows to demonstrate intuitively the vulnerabilities of continued technocratic, functionalist integration, including both “politics without policy” at the national level and “policy without politics” at the European level. This combination provokes deficit of democracy in the system, because prevailing assumptions and values in the EU do not legitimize such kind of social interaction. Beyond that, organizational culture theory serves in the article to produce a refined typology for examining the dynamics of fiscal governance modus vivendi in the EU. It consists of four ideal types, with collective representations (institutional dispositions) inherent to each one of these types on a standalone basis. In following the cultural version of organization theory, a researcher has the opportunity to clarify, which of the four types are more in tune with currently prevailing ideology of fiscal integration in the EU. The conclusion is that fiscal integration is undergoing a change from an authoritarian-liberal regime towards a disciplinary-liberal one. In practice, the Commission starts combining the function of an executive body in regulating national budgetary policies with that of a European pro-treasury. However, a significant increase in the general supranational budget should not be expected. Neither will the EU abandon its commitment to fiscal discipline.