Study on impact of EU decision-making structures on the economic crisis

Study on impact of EU decision-making structures on the economic crisis

April 13, 2015

The European Parliament Special Committee on the Financial, Economic and Social Crisis (CRIS) commissioned Copenhagen Economics to conduct an impact assessment on consequences on the real economy of insufficient/delayed coordination in the context of the financial and economic crisis.


The study considers what might have been different if the EU had a perfectly coordinated and efficient decision-making mechanism. It focuses on the EU’s role in crisis prevention and crisis management, identifies policy failures during these two stages of the crisis, and offers some recommendations for policy actions at EU level to prevent such crisis to reoccur.


The study concludes that the cost of non-prevention may amount to a staggering accumulated output loss of 20%-25% of EU GDP over the next 5-7 years. Prevention policies have almost by definition failed: large economic balances and budgetary deficits were allowed to build up, causing the subsequent recession. In addition, the crisis control, most notably the ability to deal with the crisis inside the euro zone and provide support to the ailing financial structure in a non-distorting way, is found lacking. By contrast, the study finds that EU efforts to mitigate the consequences of the crisis by loosening fiscal and monetary policies have been relatively successful.


The study can be found on the website of the European Parliament here


For further information contact managing economist Helge Sigurd Næss-Schmidt