Introduction

With the onslaught of the global financial and economic crisis, the European Union transformed – à contrecoeur – from a benign project of Pareto-optimal single market expansion and currency integration into a more contested political project. There are debates today as to how close the euro came to breaking down in the wake of the Greek sovereign debt crisis. What is certain is that the sovereign debt crisis fed back into political distrust in some EU citizens and among the leaders of some member states, with the European Commission caught in the middle of the crossfire. Be that as it may, the recent politicization of the European Union cannot be understood as a mere by-product of the Great Recession. The bumpy debate on the draft EU Constitutional Treaty revealed a narrative of welfare paradise lost, pitted against the “liberalizing” ambitions of the European Union, as already pointed to in the context of the “Bolkestein directive”.

It is a fact, however, that the perception of welfare betrayal by the European Union further increased in the wake of the E(M)U Great Recession crisis management. After a brief spell of “fire brigade” Keynesian stimulus in 2009, the Greek debt crisis confronted the European Union with a wholly novel fiscal aftershock. With contamination concerns spreading from Greece to the periphery of the eurozone, including Spain, Portugal and Ireland, EU institutions turned to fiscal consolidation measures. The financial crisis was redefined in the debate as a crisis of fiscal profligacy, opening up the way for tough and prolonged welfare retrenchment and deep labour market deregulation. In addition, however, less exposed economies, especially those that had had to bail out systemic banks, such as France, the Netherlands and the United Kingdom, staged austerity-oriented welfare reforms, including cuts in civil servant salaries, pension benefit freezes and retrenchments in social services. The European Council, with the establishment of the “European Semester”, created an institutional device to urge member states to pursue fiscal consolidation. And, although the 2011 Annual Growth Survey (AGS) identified overgenerous welfare states as impediments to European growth and competitiveness, the “fiscal compact”, agreed in December of the same year, provided the European Union with new tools to reinforce national budgetary discipline.