I will then turn to the national level and illustrate these principles with reference to the French situation (II). I. Improving Europe’s future fiscal rules The EU and its member states have reacted vigorously in 2020. The ECB’s balance sheet is now double the size of the Fed’s as a percentage of GDP. And active fiscal policy was of the essence. In 2020, Covid-related discretionary measures were stronger in the United States than in the main euro area countries. However thanks to our social model and its higher automatic stabilizers, the overall 2020 fiscal stimulus in the euro area was almost as strong as in the United States:  Having said that, what can explain the larger loss of GDP in 2020 in the euro area compared to the United States? According to the Banque de France’s work, much [80%] of the difference in losses is due to something other than public support. In southern Europe, about 40% is explained through effective constraints on economic activity, and 40% through sectorial specialisation – the higher dependence of European countries on tourism, and the technological lead of the United States (development of teleworking before the crisis, weight of new information technology, share of e-commerce…). Three major crises in the past ten years – 2008-2009, 2011, 2020 – have nevertheless shown the need to complete the Economic Union in addition to the successful Monetary Union, starting with a permanent fiscal capacity.
Thank you for your attention. Les notes du Conseil d’analyse économique, Pour une refonte du cadre budgétaire européen, Avril 2021 Abiad A., Furceri D., Topalova P., The Macroeconomic Effects of Public Investment: Evidence from Advanced Economies, IMF Working Paper, May 2015. iii The American Crisis (circa 1776) i  ii