The Future of German Fiscal Policy: Workshop at the MPIfG

Sixteen researchers from Germany and other European countries gathered at the end of November 2025 for a workshop at the MPIfG exploring “From Austerity to Expansion? Rethinking Fiscal Policy in an Age of Crisis.” With unprecedented public spending in response to the COVID-19 pandemic, the war in Ukraine, and the energy crisis, the workshop participants discussed whether a fundamental transformation away from austerity and toward expansionary fiscal policy is taking place, or whether established institutional path dependencies will ultimately remain. Central to their discussions were core tensions in European fiscal governance. Iain Begg (London School of Economics) questioned the need for numerical fiscal rules, while Lucio Baccaro (MPIfG) highlighted the growing asymmetry between the ECB’s highly expansionary monetary policy and a largely unchanged set of fiscal rules. Vanessa Endrejat (European University Institute) analyzed how the EU created new fiscal leeway during the pandemic through off-balance instruments such as the Recovery and Resilience Facility, and Pálma Polyák (MPIfG) explained how Germany tended to limit rather than open up reform of European fiscal rules. Complementing these contributions with actor-centered perspectives, Mischa Stratenwerth (MPIfG) examined shifts in the positions of German business associations on public investments, with Camilla Locatelli (MPIfG) comparing the role of technocratic elites in fiscal negotiations in Italy and France. The closing panel with Andreas Eisl (Jacques Delors Institute) and Clara Leonard (Institute Avant-garde) discussed the political obstacles to reforming the European fiscal system. The workshop organizers were Mischa Stratenwerth, Camilla Locatelli, and Vanessa Endrejat.