Notre Europe – Jacques Delors Institute publishes a study commissioned by the Federal Chancellery of Austria on the impact of the reforms currently implemented or mooted on national welfare states in the EMU.

As Jacques Delors underlines in the foreword of this study, national welfare states, to which Europe’s citizens feel immensely attached, play a central role in EU countries whatever the differences there may be among the member states. Even though the welfare state was already facing a dual challenge in terms both of funding and of effectiveness before 2007, the current crisis has only worsened the tension weighing down on welfare states.

The economic downturn has translated into a significant rise of unemployment and poverty levels, in particular in the euro area periphery, whereas growing pressure to consolidate national budgets is forcing significant cuts in social spending. At the same time, the crisis has led to a major reform of the European economic governance and the current debate suggests deepening the process of integration within the euro area in the fiscal, economic, banking and political fields.

In the first part of this study, Sofia Fernandes and Kristina Maslauskaite present an overview of the state of ”Social Europe” today with an emphasis on the consequences of the new economic governance on national employment and social policies and the impact of the current crisis on national welfare states.

In the second part of the study, the authors propose three possible scenarios for EMU’s future. These scenarios are built on different assumptions and they include a set of initiatives in the fields of the fiscal, economic, banking and political union as well as EMU’s social dimension. The authors assess each scenario on the basis of their main consequences for the euro area economy and for national welfare states from core and peripheral member states.