This article argues that the European Central Bank (ECB), supported by the Court of Justice of the European Union (CJEU), can be perceived to have functionally softened the no sovereign lender of last resort (LOLR) rule originally implied by Articles 123 and 125 of the Treaty on the Functioning of the European Union (TFEU) towards a rule-with-exceptions and, increasingly, towards a presumption: The ECB will act as sovereign LOLR to a constituent Member unless and until that Member is insolvent or unwilling to cooperate with measures designed to restore market confidence. This functional moderation of a rule, from an ex ante specification of an outcome towards the exercise of greater choice at the point of application, carries with it contentious normative questions. To motivate discussion thereof beyond a largely ahistorical, non-indexical, rules versus discretion debate, the rules of the currency union are located within the genealogy of international exchange rate regimes. The “convertibility” rule of the gold standard and the “parity” rule of the Bretton Woods system are contrasted with their Eurozone equivalent. A consequentialist standpoint is sketched out from which the interventions of the ECB, in light of their available alternatives, appear broadly consistent with welfarist cost-benefit analysis and less normatively worrisome than by reference to evaluative criteria that emphasize a narrowly rule-bound conception of the rule of law.

This article describes and explains labour market reforms in Portugal during the sovereign debt crisis from 2011 to 2014. Policy outputs were not homogenous, but differentiated between a first phase where recalibration co-existed alongside hard liberalising measures and a second phase, from late 2012, where recalibration was dropped and liberalisation further deregulated employment protection and security and eroded collective bargaining. This variation is explained by the changing coalitional politics and blame allocation underpinning policymaking under conditionality. Initial reforms resulted from a broad informal political coalition spanning the governing centre-right parties, the main opposition party, a trade union and employer confederations; its breakdown in late 2012 led to the executive’s increasing centralisation, the shut down of social concertation, and more radical policy outputs. The article shows that cooperation between government and opposition and government and social partners is possible even under external conditionality, how coalition politics affects the nature and direction of reforms, and highlights how political dynamics of blame allocation drive the process of coalition building and breakdown.

The European Union provided a mixed response to the 2008 financial crisis. On the one hand, it refused to pursue fiscal integration through a common budget; on the other, it introduced significant transfers between countries that were designed to produce financial stabilization. The authors analyze this response as the outcome of democratic constraints on EU leaders. Given the EU’s current institutional structure, citizens’ preferences pose a binding constraint on what leaders can do as these preferences limit the scope of risk-pooling among members and the degree of political tolerance for different courses of action. The authors show that citizens’ preferences reflect differences in the geography of income, production regimes, and institutional organization. The heterogeneity of constituencies’ redistribution preferences combined with a diverse economic geography helps to explain why political constraints on national governments prevent them from engaging in further fiscal integration. By contrast, externalities among member states shift the preferences of citizens who may experience negative effects and make international redistribution politically feasible. The authors analyze these two mechanisms and present novel empirical results on the determinants of preferences for fiscal integration and international redistribution in the aftermath of the eurocrisis.

This paper strives to shed light on the interaction between business groups and the main governing parties after the onset of the economic crisis through a “thick narrative” approach. By focusing on the Portuguese case, the study aims to examine the preferences of the employer confederations during the distinct phases of the economic crisis and to analyze the political alignments established with different party governments. This contribution confirms the fragmentation of business interests on the one hand and tensions between the right-wing government and the main employer confederations on the other. While a pragmatic approach to party politics seems to be the predominant trend, historical and institutional legacies are still important factors when considering the actions and inner tensions of these organizations.

This paper analyses the politicisation of the Eurozone crisis in Finnish public debate, in May-November 2010. We emphasise how the mainstream parties responded to the radical right Finns Party's framing, in addition to two context factors: first, the constraints posed on domestic policymakers by EU and EMU-level decisions, and secondly, the sharp, economic downturn, encouraging a zero-sum interpretation of distributive claims. To trace actor positions, we analyse 1183 actor-issue statements coded from Finland's main newspaper, Helsingin Sanomat. Our findings suggest that radical right-wing parties can benefit from the high salience of socio-economic issues, if distributive conflict can plausibly be portrayed as a in- and out-group conflict, and that the mainstream parties did not only adopt nationalistic rhetoric as a response to the radical right-wing Finns Party's framing, but were responding to a constraints such as the diminished room for maneuver in the EMU, moving them towards the Finns Party's position.

In this paper, we apply two novel methodological approaches, Tucker three-way principal component analysis and locally weighted principal component analysis, to construct financial conditions index for Eurozone countries. The aim is to point out how real and financial macroeconomic variables affect the credit channel and which variables are more relevant in each occasion, highlighting structural differences within the Eurozone. The results suggest that the Eurozone is involved into a low easing pattern, which is difficult to reverse and affects considerably the financial conditions, surrounding the hypothesis that this pattern has been worsened by structural differences between the European Monetary Union (EMU) countries. Empirical evidence shows that European Central Bank (ECB) policy has managed to cool financial tensions and has made financial conditions homogeneous, but it has not been able to restore them at a precrisis level.

What explains business views regarding policy preferences in the Eurozone crisis? Although recent literature examines the impact of the crisis on citizen views, few studies examine business preferences towards adjustment policies. We present unique data from a new representative survey of 500 high-level firm representatives from Spain to test theories about such preferences, in particular views about the euro, fiscal austerity, and wage devaluation, as well as plausible mechanisms for such preferences. We test three broad families of theories to explain such preferences, focusing on the role of structural firm characteristics, economic hardship, and political leanings of firm managers. We find that first, there is a strong conservative position regarding all of these policies. Second, we find that contra conventional approaches to explaining preferences, for the domestic policies (but not for euro views), the political leanings of firms matter much more than baseline structural characteristics. Third, we find that surprisingly economic hardship does not cause firms to demand more left-wing policies, as it might for voters; in fact, firms that have suffered are likely to be more skeptical of such measures. These findings indicate the need to better measure political orientations of firm respondents and suggest that this is a larger division among firms than previously recognized.

The paper investigates the factors that led the Italian government to accede to the Fiscal Compact in spite of its demanding requirements for the country’s budgetary policy. Specifically, the paper assesses the extent to which Italian government’s support for the Fiscal Compact was driven by the logic of the ‘vincolo esterno’ in a replication of the pattern that led Italy to sign the Maastricht Treaty. The paper finds only limited support to the ‘vincolo esterno’ argument. Rather than being motivated by domestic dysfunctions or socialization to the fiscal discipline doctrine, the Italian government acted mainly out of market punishment fears. Interestingly, however, three factors filtered such external pressures and contributed shaping government’s support for the new Treaty. First, the Economic and Monetary Union unfinished architecture, and in particular the lack of a European financial firewall, weakened opposition to the new Treaty. That is to say, the institutional context constrained the choices that Italian policymakers could pursue. Second, the pro-European orientations of government members contributed to elevating the new Treaty to a symbol of European integration. Finally, the Italian government confronted a quite large domestic win-set during the negotiations, as the parties supporting the Monti government also supported Italy’s participation to the new Treaty.

The paper considers the impact of the current economic crisis on post-socialist welfare capitalist states through an examination of two most different cases: neo-liberal Estonia and neo-corporatist Slovenia. The crisis prompted the most sustained political contestation with respect to each model in two decades. Considering national public sphere discussions within a broader European context, the paper shows how transnational advocates of austerity reinforced Estonia’s neoliberal model but emboldened critics of the Slovenian model to roll back the state. While public sphere debates within small, peripheral states must be understood within transnational contexts, in both cases we can observe more continuity than change in the collective ideas underlying each model.