The European Environmental Bureau (EEB), with more than 270 prominent academics, think tanks, and civil society organizations from all EU 27 Member States, have today published the Manifesto for a Green, Just, and Democratic European Economy, calling for fundamental reform of the EU’s Economic Governance Framework.
The signatories to the manifesto are calling for a deep reform of the EU’s fiscal rules to reorient it towards achieving social, intergenerational and gender justice as well as protecting the climate and the environment.
The current economic framework of the EU is based on the Maastricht Treaty, which was signed in 1992 . The treaty together with legislative changes enacted in the aftermath of the global financial crisis in 2008 established strict fiscal limits that limit member countries’ public debt and deficits . While coordinating fiscal policies is necessary in a monetary union, these rules are no longer fit for purpose in light of Europe’s new challenges such as climate and social crises. Furthermore, the war in Ukraine highlights the need to accelerate the transition towards renewable energy to strengthen energy security and address energy poverty.
In particular, the current rules are indifferent to the quality of spending. However, how investments contribute to meeting social and environmental objectives is key for the transition to a safe future.
Moreover, the focus of the current EU’s economic governance is based on the old paradigm of indiscriminate economic growth, failing to be receptive to social and environmental challenges and foster systemic transformation. This paradigm is based on assumptions and indicators that have been challenged and disproved both theoretically and empirically .
To fight climate change and respond to the new challenges that await us, we need to respond to the crises with a focus on rebuilding our system towards a well-being economy. To do so we need rules that support green and care jobs, lift up vulnerable communities and improve people’s & nature’s well-being.
The manifesto states:
“The aim of economic policy across Europe must not be to simply reduce debt. The economy needs to serve the reduction of socio-economic, intergenerational and gender inequalities, the realisation of social rights and the protection of climate and environment. The EU’s fiscal framework should fully support just transitions and a systemic transformation of our economies and societies to keep global warming below 1.5°C.“
It calls for:
“A deep reform of the EU economic governance framework, to make sure reformed fiscal rules will be consistent with agreed EU social, climate and environmental goals. Spending quality is of the essence: citizens’ money must be well-spent and serve democratically-defined objectives.”
“A socio-economic transformation of our economic model, a change of paradigm, emphasising the need for considerably increased public investment as well as a strong social dimension of the economic governance, supported by the European Pillar of Social Rights.”
“A new approach to ensuring member states’ debt sustainability. Reforms must take into account national contexts, the need to avoid self-defeating austerity, the convergence of European economies, and the building up of fiscal risks.”