People across Europe are struggling with rising costs of living as a consequence of Putin's attack on Ukraine. Compounding matters, structural changes have hit Europe’s economies, driven up inflation, produced a shortage of skilled labour, all while accelerating technological change and the changing dynamics of globalisation. Governments across Europe and the EU have taken decisive and necessary action of protecting the most vulnerable from the economic shocks and higher energy prices, but there seems to be no end in sight. At the same time, money spent on support packages as well as defence and security has impacted the fiscal capacity of governments to undertake necessary long-term investments in a green economy, education, skills and research. This puts fiscal credibility at stake and puts a question behind the ‘Golden Rule’. The key question will be how progressive leaders can deliver on balancing the needs to support the most vulnerable in the short-term and deliver on long-term objectives, such as climate change and social justice.
The Golden Rule refers to a term coined by Gordon Brown and his advisor Ed Balls in the UK that 'over the economic cycle, the Government will borrow only to invest and not to fund current spending”.