Austerity measures, shift of sovereignty and democratisation of European institutions

The paper analyses the recent reforms of the Economic and Monetary Union (EMU) in the light of the sovereign debt crisis. In the last few years, the Euro area has created rescue mechanisms to avoid default of its Member States,has strengthened economic governance and has introduced a stronger European prudential supervision on the banking system. Several Member States have therefore adopted austerity measures to respect the new rules on fiscal integration under European coordination. The current process of transformation of the EMU presents, however, several contradictions, which could undermine the legitimacy and efficacy of the reforms. First, the development of stronger European economic governance is eroding core sovereignty of Member States, raising concerns from national Constitutional Courts. Second, the new economic governance is managed by intergovernmental bodies, which do not directly respond to the citizens in contradiction with the democratic principle. Lastly, the adoption of austerity measures under the new rules on fiscal integration has caused the violation of social and labour rights in many Member States.