A new political economy for Europe post-COVID-19

Abstract

The COVID-19 pandemic has led to unprecedented economic support measures from governments across Europe. With this, the crisis has provided an occasion for a significant demonstration of the ability of states to implement policies and deliver services. This could create expectations among electorates of permanent changes to the macroeconomic regime, towards one characterised by a more protective state and a rebalancing between the state and the market. Significant political barriers to such a shift remain. The article argues that, in contrast to the aftermath of the two previous economic crises in Europe, many new ideas are floating around and support for a more protective state is emerging across the political spectrum. The current crisis might thus represent a turning point.