The European Union facing the dilemma: Fairy godmother or fiscal stepmother?

The European Union is at a crucial moment where it must decide whether to act as a benevolent fairy godmother or a strict stepmother when it comes to its fiscal rules. This dilemma arises in a challenging global geoeconomic context and amidst internal political tensions that require balancing fiscal austerity with the need to make significant investments to drive long-term sustainable and equitable growth. This situation reminds us of the words of St. Augustine in his Confessions, when he asked for chastity but not immediately, thus posing a challenge for the EU in its pursuit of economic stability. In retrospect, the EU has played roles of both repressive stepmother and fairy godmother in previous crises. During the 2008 crisis, it chose fiscal austerity, resulting in recession, unemployment, and social unrest. In contrast, during the 2020 pandemic crisis, it acted as a fairy godmother by temporarily suspending fiscal rules to implement social and business support programs, achieving a faster and more effective recovery. Now, the question arises about the role the EU will adopt under the new fiscal rules and whether it will learn from past lessons. There are reasons to believe that the EU will lean towards the role of fairy godmother this time. Firstly, European society will not tolerate a repeat of past mistakes. Additionally, the new global geoeconomic order, marked by confrontation between major powers and the need for investment to compete, will pressure the EU to act more actively. Furthermore, the shift in economic challenges, such as environmental sustainability and trade-offs between objectives, requires more democratic and balanced governance. In this context, the report from the Economic and Social Council of Spain emphasizes the importance of finding a balance between macroeconomic stability and the necessary investments to address challenges such as climate change and competitiveness. It emphasizes the need to complete the banking union, establish a single capital market, and move towards budgetary integration to strengthen European economic governance. These aspects are seen as crucial for the EU to act as a fairy godmother and ensure equitable and sustainable development in the region. Ultimately, the EU has the opportunity to overcome its challenges and strengthen its role as a global actor. Through the adoption of measures that promote economic stability, sustainable investment, and social cohesion, it is expected that the EU can become a driver of progress and equity for its citizens. The path to becoming an economic fairy godmother will require courage, vision, and collaboration, but it could pave the way towards a prosperous and sustainable future for Europe and its inhabitants.