Rethinking economic success – let’s talk about what it can do for wellbeing instead

Recently, the European Commission relaunched the EU Economic Governance Review public debate after a year’s hiatus. The public now have until 31 December to submit a response before the EU and its Member States do the back-and-forth as to how EU fiscal rules should be reformed. So why is it so important that the Commission hears from all of us, not just those in the EU bubble?

Breaking down the details

The EU’s fiscal rules oftentimes feel far removed from our day-to-day life, but they have trickledown effects in our lives without us even realising. In a nutshell, these rules determine how EU countries can or cannot spend, based on a set of out-dated rules that determine how far their debt and deficit levels can go (i.e. not beyond 60% debt-to-GDP ratio or 3% deficit-to-GDP ratio). If a country goes over, they then have to get these levels back down pronto, which often means austerity. We saw this in the last global financial crisis.

But what civil society has been speaking about for so long, is that it is always people at risk of poverty or social exclusion who are the ones to suffer first, and the most, from austerity. In Greece, for example, we’ve heard about people being unable to access an adequate pension due to spikes in tax rates. During COVID-19, we heard about a women’s shelter in Luxembourg that faced a shortage of places due to spending cuts; coupled with a lack of government support, a mother and her five children had to stay in alternative accommodation and pay around 18,000 euros to stay in two hotel rooms for two months.

COVID-19 has made it clear that our systems simply are not working for the people they are designed for. But we now have an opportunity to move forward together without repeating the mistakes of the past.

Leading with a wellbeing approach

In our recently published position paper on the EU Economic Governance Review, we call for a number of changes.

  1. It’s time to put the wellbeing of people and the planet at the centre: We need to rethink how we view economic success and see it beyond a means to an end. We need to look beyond GDP as a measurement of success and instead see the fiscal framework as a driving force behind achieving social progress.
  2. EU Member States need greater fiscal flexibility so they can invest in social areas that matter: The current fiscal rules need to be changed so that they cater to the specific contexts of different countries. By doing so, EU Member States have more breathing space to make the investments needed in life-saving social protection and social services, without having to worry about any fiscal consequences.
  3. Civil society need to be involved at all stages: From drafting national budgets, to monitoring what the impact of certain social or environmental investments are having on people, civil society needs to be at the table at every point, to make sure that people – particularly the most vulnerable – benefit from these rules rather than being pushed to the side.

EU fiscal rules can no longer be a clinical, far-away concept: they need to help us change the system so that it continues to contribute to sustainably improving the quality of life of everyone and the planet. Reformed EU economic governance is just one piece of the puzzle to make this a reality.