Institutional choices for EU fiscal capacity: problems and alternatives

Member States have consistently attributed more competences to the EU over past decades. However, the scope of EU law has not been confined to 'constitutional' attribution, as the CJEU has had a very significant role in expanding its influence and also curtailing States' retained powers. It is argued that this competence absorption, as well as Treaty harmonisation limitations, had a decisive influence in EU integration, particularly on economic and fiscal integration, since it provided the incentives to further integration of these pivotal national competences outside the Treaty framework. However, this approach's shortcomings placed another institution under pressure. In fact, the ECB has arguably acted on the borderline of legality, thus jeopardising two of the most important Treaty principles: price stability and central bank independence. These consequences derive from institutional choices and have brought about new solutions from different actors, such as Next Generation EU by the European Commission, although it is still unclear whether this should be the path to be pursued in the future.