From ordo-liberalism to ordo-Keynesianism? The contradictory nature of EU economic governance

This paper traces the incremental abandonment of ordoliberal EU economic governance and the emergence of an inconsistent form of supply-side or 'ordo-Keynesian' regime that emphasises public support for investment as the key to growth and competitiveness. On the microeconomic side, this reorientation is marked by a turn to industrial policy, a significant relaxation of competition and state-aid policies, and a shift in the common commercial policy towards more protectionism. On the macroeconomic side, it is reflected in the temporary suspension of the Stability and Growth Pact, the establishment of the Recovery and Resilience Facility, and a monetary policy that displays a larger concern for growth by creating more space for public investment while softening fiscal adjustment requirements. This article discusses the evolution (and partial demise) of the EU's ordoliberal macroeconomic regime and signals the potential contradiction between adherence to nominal stability and sound budget policies and the promotion of growth.