The fourth chapter commences with the background of the euro crisis and its impact on the general institutional set-up of European economic governance. The chapter shows how the EU changed the instruments of its fiscal integration as a result of the threat emerging from the euro crisis that out broke in 2010. While in the ‘pre-threat’ governance stage, it relied mainly on weak regulation of the fiscal policies of the member states, in the ‘post-threat’ economic governance period, this regulation instrument was significantly strengthened, in the form of the European Semester, a cycle of monitoring the fiscal and economic policies of the member states. This introduced the possibility of sanctions for non-compliance with the EU’s rules and recommendations under its two procedures of excessive (macroeconomic) imbalance (EIP) and excessive deficit (EDP). In addition, the new instrument of fiscal integration began to be implemented—quasi-fiscalization, in the form of lending institutions, such as the European Stability Mechanism (ESM).

As a result of the euro crisis, EU economic governance has been reformed and EU institutions have gained new competences regarding national budgets, with the European Semester (the annual cycle of economic surveillance of the member states) being the most prominent example. With the Commission and the Council being the main actors, and the European Parliament playing only a minor role, a debate about the democratic legitimacy of the Semester and the role of national parliaments (NPs) in this regard has unfolded. This thematic issue, therefore, addresses the question of how parliamentary accountability of the European Semester has evolved: Have NPs met the challenge by adapting to the new situation in a way that allows them to hold the executive accountable? While the contributions to this thematic issue show significant variation across NPs, overall they reveal a rather pessimistic picture: Despite several institutional innovations concerning the reforms of internal rules and procedures, the rise of independent fiscal institutions, inter-parliamentary cooperation, and hearings with the European Commissioners, NPs have remained rather weak actors in EU economic governance also ten years after the Semester’s introduction. Whether recent changes linked to the establishment of the Recovery and Resilience Facility introduced in response to the Covid-19 crisis will change the picture significantly remains to be examined.

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The fifth chapter analyses the preferences of the member states regarding the EU’s fiscalization. In doing so, it examines member states’ contributions prepared as part of a debate on a strategic EU document outlining institutional options for the future of the EU, the so-called Five Presidents’ Report. The member states were grouped according to their preferences on fiscalization—to what extent the member states were mentioning a threat as a reason for fiscalization? By listing those arguments, this chapter found many contributions did not mention a threat—the main factor underpinning the hypothesis of this book. However, this is the very reason, it argues, why there is no fiscalization in the EU—the threat emerging from the euro crisis was not perceived by the member states to be large enough to trigger such a fundamental shift in the instruments of integration. As a result, fiscal regulation, and not fiscalization, has been chosen as the main instrument of fiscal integration.

Building on recent research comparing the EU and the USA and drawing on Riker’s theory of federalism, this book explores the origins of fiscal unions. It investigates early American history to argue that an internal threat—e.g. a sovereign debt crisis leading to social unrest—triggers the emergence of federal taxing powers—i.e. a federal fiscal union. It concludes with four insights for the EU. First, fiscalization tends to be proceeded by an internal threat. Second, fiscalization can trigger the democratization of central institutions. Third, any proposed federal fiscal union to be successful should be proceeded by a wide debate. Finally, the main opponents of fiscalization should be offered clear benefits that will result from giving up some of their tax power in order for fiscalization to be successful. This is a first monograph to compare the American and European models of fiscal integration, offering two original contributions. It introduces the concept of fiscalization, which defines the emergence of a federal fiscal union. Then, by analysing the USA’s Confederation period and applying Riker’s theory using mainly unexplored primary sources, this book adds to the USA–EU comparative federalism literature. This research introduces the reader to the similarities and differences between the pre-Constitution USA and the contemporary EU with regards to their fiscal arrangements; a comparison of the arguments that were used while debating those arrangements; and finally the conditions under which the central level of government in systems of multilevel government is likely to acquire a power to tax.