Understanding and Shaping Europe

As part of the Max Planck Hub Fiscal and Social State, renowned experts from theory and practice will once again be invited to discuss important developments in European fiscal and social policy in 2025.

Prof. Dr. Michael W. Müller, Chair of Public Law and European Economic Law at the University of Mannheim, kicked things off on 13 January. Müller is a proven expert on the European financial order and habilitated at Ludwig-Maximilians-Universität in 2024 with a thesis titled 'Konditionalität – Zu einer Form nicht-imperativer Verhaltenssteuerung durch öffentliche Finanzen im deutschen und europäischen Recht' ('Conditionality - On a form of non-imperative behavioral control through public finances in German and European law' - forthcoming)

The Future of the European Financial Constitution

Despite freezing temperatures, over 50 guests attended to hear Müller's ideas on the “Future of the European Financial Constitution”. Müller had chosen the term “future” very carefully: it was intended to focus on the work still to be done and the role of science, which can and should accompany this process.

Müller began with an overview of the basic structures of the European financial constitution. He identified the multiannual financial framework, the continued strong focus on contributions and the executive character as well as “steering by finance” through conditionality mechanisms as particular structural elements.

Perpetuation of Crisis Mechanisms?

The debate about European financial sovereignty has flared up again since the Covid-19 pandemic and the Russian invasion of Ukraine. The instruments NextGenerationEU and later REPowerEU brought with them crisis measures, albeit fundamentally temporary, that were previously hardly conceivable. However, according to Müller, the Commission's plans are not to stop there, but to steer the entire European financial architecture towards a debt-financed transfer union. He takes a critical view of this normalization of a “union debt as a general financing instrument”. Instead, the focus should be on “new, genuine revenues”, which are also detached from pure contributions from the Member States.

On the expenditure side, Müller welcomed the fact that the plans provide for a significant simplification of the complicated budget structures and focus on supranational “European public goods”. However, the continuation of the practice of negotiating national overall plans directly between the Commission and the Member States is problematic. This would weaken the control of individual expenditure within the framework of program conditionality, but strengthen the Commission itself institutionally.

The Interplay of Solidarity, Solidity and Sovereignty

Müller ultimately sees the European financial constitution as a mirror of the major European integration project: here, too, the question of solidarity meets that of solidity and sovereignty. Direct financial solidarity currently only exists between the Member States; it remains indirect between the citizens. Financial solidity should not be neglected, especially when it comes to common debts. And the Union could hardly achieve financial sovereignty by taking on debt - rather, this led to dependencies. In combination with the focus on the contribution system, there is a risk with the current plans that the Union will develop into a pure redistribution agency and that the goal of specific integration projects will fade into the background.

Nevertheless, Müller did not want to end his presentation on a pessimistic note, but with an appeal to the scientific community to address these problems in particular. It is not about technical peripheral issues, but about core aspects of the European project. Above all, it is necessary to work out how democratic financing of the EU can be conceived that offers Europe an added value, but at the same time takes into account the autonomy needs of the Member States.

Which Europe are we Actually Planning for?

In the subsequent debate, the legal requirements for conditionality mechanisms in European and German law and the potential of various conceivable financing instruments, including a “genuine” EU tax, were lively discussed. In this context, it was also questioned whether the term “European financial constitution” is at all appropriate given the current state of development. The discussion concluded with the question of which Europe we should actually plan for in view of the rise of right-wing populist forces. Will we continue to pursue “integration through law” or will a period of “integration through money” begin?

Dürr / Mahlig / Salzer