The case of the disappearing Fiscal Compact. CEPS Commentary, 5 November 2014

Following the Commission’s autumn forecast showing that only five euro-area countries exhibit a fiscal balance better than the 0.5% of GDP deficit allowed by the Fiscal Compact, Daniel Gros and Cinzia Alcidi attempt to explain in this new Commentary why there is precious little policy debate over these flagrant treaty violations. They find that it is not possible to put fiscal policy in a legal straightjacket and that the tight rules enshrined in the new Treaty and in national constitutions are discarded as soon as they become politically inconvenient.

The fiscal compact - Europe's "hard core" based on German economic conditions. OSW Commentary No. 71, 2012-03-07

On 2 March, the leaders of 25 EU member states signed the Treaty on stability, coordination and governance in the economic and monetary union. It will introduce new fiscal constraints and officially vest new competences in the eurozone countries. Thus, their right to coordinate economic policy among them will be sanctioned. So far, the Lisbon Treaty has only provided for organisation of informal Eurogroup meetings, to be attended by representatives of the European Commission. The principles introduced by the compact, if the eurozone countries are really determined to observe its provisions, will create a new way of managing the single currency. Within the next few years, the most indebted countries will have to carry out radical reforms to boost their competitiveness and adjust it to German standards. During this period the Federal Republic of Germany will most probably decide to offer higher loan guarantees to relieve these countries’ budgets. The compact’s political consequences are also of great significance, especially considering how the treaty was finalised. The eurozone states have in fact accepted that the direction for changes will be devised by France and Germany, and the role of European institutions such as the Commission or the Parliament may weaken. From the perspective of eurozone candidate countries, the introduction of the fiscal compact means expanding the scope of conditions they must meet to become members of the single currency area. In the future, a country, in order to adopt the single currency, will have to meet the structural deficit criterion, and also most probably carry out economic reforms such as unifying its fiscal system. These goals will be achieved across the eurozone gradually, in the subsequent stages of the economic governance reform.

The Circular Economy: Barriers and Opportunities for SMEs. CEPS Working Documents No. 412/September 2015

The ‘circular economy’ is gaining momentum as a concept in both academic and policy circles, and circular business models have been linked to significant economic benefits. This paper identifies barriers and enablers to adopting circular economy business practices, and presents key messages for policy-makers. It draws on input from a literature review, on discussions held in the context of the GreenEcoNet project and on an analysis of two SME circular business models.

Moral Opinion Polarization and the Erosion of Trust

Since Puntam's seminal work on declining levels of social capital, the question of how social trust is formed has reached unprecedented heights of critical enquiry. While most of the current research concentrates on ethnic diversity and income inequality as the main influences driving down generalized trust, we focus on opinion polarization as another potential impact factor on trust. In more detail, we investigate the extent to which polarization over morally charged issues such as homsexuality, abortion and euthanasia affects individuals' likelihood to trust others. We hypothesize that moral issues have a natural tendency to divide societies' opinions into opposing poles and, thus, to challenge social cohesion in modern civil societies. Based on hierarchical analyses of the fifth wave of the World Values Survey (WVS) — comprising a sample of 39 countries — our results reveal that individuals living in countries characterized by more opinion polarization tend to have less trust in other people.

The 2015 National Elections in Switzerland: Renewed Polarization and Shift to the Right

The 2015 election to the Swiss Parliament marks a return to an already observed trend that was only interrupted in 2011: a shift to the right and an increase in polarization. The vote share of the nationalist-conservative Swiss People's Party (SVP) has now reached a historical height of 29.4% (+2.8). This note discusses why cantons matter in the Swiss national elections, and to what degree elections have become nationalized. Institutionally, the 26 cantons serve as electoral districts. This leads to a highly disproportional electoral system and has magnified the minor vote shifts to a slightly more pronounced shift in seats, with the right now holding a tiny majority of 101 of 200 seats in the first chamber. The two winners, the SVP and the Liberals, also had most campaign funds at their disposal. They were able to guide an extensive nationwide campaign in which they advocated their core issues instead of candidates. Other parties only advertised at the cantonal level.