Eight months after adoption, less than 60 per cent of the country-specific recommendations are partially or fully implemented, and the performance has worsened after the introduction of the European Semester (ES). This chapter employs political economy theories of reform to explain differences in implementation, analyzing the full set of recommendations released between 2002 and 2019. A combination of economic and electoral pressures as well as the costs of noncompliance are associated with these patterns. Proximity to electoral contests lowers the rates of implementation, even though this effect weakens under the ES. In 2002–2010, inflationary pressures acted as drivers of compliance in euro area countries and as obstacles to compliance in non-euro area countries. After the introduction of the ES, the sovereign debt crisis triggered fuller implementation. Moreover, governments adopted especially those actions that were associated with a more established supranational system for sanctioning noncompliance. Raw country power has had different implications. Countries with higher voting power were initially less compliant. Later on, economically larger countries complied more.

The second part of the book investigates the implementation of the policy. As far as preventive surveillance is concerned, at its core lay the country-specific recommendations on the macroeconomic policies of the member states. These recommendations are the object of intense negotiations between the Commission and the Council. Why are they a matter of bargaining? What shapes the Council’s propensity to modify the Commission’s proposals and what affects their strengthening or weakening? This chapter employs bargaining and compliance theories to address these questions. Analyzing the recommendations issued between 1999 and 2019, it shows that the Council is rather active in modifying the Commission’s assessments and strengthens four-fifths of the recommending provisions that it decides to modify. Economic and supranational factors dominate this process. Governments balance the pressures originating from the bargaining dynamic within the Council with the need to preserve policy credibility and effectiveness in the face of noncompliance and worsening economic conditions.

Chapter 2 gives scholars and students across disciplines, but also policymakers, trade unionists, and social movement activists, a clear account of the arcane new economic governance (NEG) regime that European Union leaders adopted after 2008. The chapter avoids jargonistic academic language as well as the Euro-speak of the EU’s economic governance documents when describing the setup and operation of the NEG regime. This is important if one wants to understand its internal contradictions and change the operation and policy direction of the EU’s NEG regime.