The purpose of this chapter was to show how the financial crisis which broke out in 2008 has exacerbated the trends which have characterized policy making and contentious politics pertaining to welfare services in the EU since the 1990s. As demonstrated in the previous chapters, these trends mainly consist of the decrease of public resources dedicated to welfare services, further marketization in the various sectors at stake and the containment (or even weakening) of contestation in the face of such policies. A first step has been to provide evidence of the repercussions of fiscal discipline on the public funding of SGI. A main observation is that welfare services have not only been undermined in countries under financial assistance (and conditionality) in the Southern, Easter and Northern (Ireland) periphery. The comparison between the extent of deficit reduction in general and the decrease of spending for welfare services shows that in countries such as Germany, Poland or the UK, welfare services have had to bear the cost of deficit reduction to an extent which is more important than in other EU countries. When looking at the role of the
EU, it appears that the new framework for budgetary and economic coordination is both opaque and ambiguous. An important aspect is that, while rules on deficit and debt have been made more stringent (by turning soft law into hard law), social policy is now being closely monitored through the European Semester. It is not clear whether this is more likely to raise attention on the social impact of austerity or, on the contrary, to accentuate the subordination of social policy to fiscal austerity. As far as welfare services are concerned, the EU institutions—in their country- specific recommendations—admonish the Member States to spend less, but to invest the modernization of welfare services at the same time—thus leaving national governments facing intractable budgetary dilemmas. The contestation of austerity policies has been most vigorous in countries most hardly hit by the crisis. At the same time, it has been very weakly coordinated at the European scale. While trade unions have been further weakened by and divided over the crisis (with large influential confederations not engaging in protest), the new movements such as Occupy, the Indignados and so on, have settled for European coalition building and claims making. This has led to the supremacy of the austerity discourse which frames the crisis as a result of excessive public spending and government profligacy. Against the backdrop of fiscal discipline, further marketi- zation is seen a means to sustain welfare services.
As the legitimacy of EU integration has been further eroded by the politics of the crisis, initiatives towards more positive integration have become even more marginalized on the European agenda. The European Semester does not easily match the conceptual categories of positive and negative integration. While it has nothing to do with market opening, it also does not contribute to elaborating common policies for economic and social coordination. Thus exhortations of the EU institutions in favour of social investment, for example, have brought about no result as they are supported by no specific policy instrument and no financial resources from the EU budget. Rather, it can be regarded as a new form of constraining centralization. Against this backdrop, the further opening of national markets and/or a greater involvement of the private sector in the realm of SGI is clearly identified as a solution to compensate for the lack of public investment in healthcare, education, energy, transport and social services. As a consequence, a two-tier system of SGI is slowly emerging, with residual services targeting the most vulnerable financed by the state, and other services (of low or high quality) offered by private providers to those who can afford it. This is arguably more likely to further exacerbate, rather than alleviate, the dynamics of growing inequalities within European societies.