Budgetary reform in times of austerity – a comparison of five European countries

This paper presents a comparative analysis of budgetary reforms in Germany, Italy, Denmark, Ireland and Estonia. In the paper we examine whether and how the crisis became a juncture for macro-budgetary reform, and whether... [ view full abstract ]

This paper presents a comparative analysis of budgetary reforms in Germany, Italy, Denmark, Ireland and Estonia. In the paper we examine whether and how the crisis became a juncture for macro-budgetary reform, and whether budgetary reforms adopted during the recent crisis alone focused on restraining the growth of public expenditure, or whether they also encouraged centralised priority setting in allocative decision-making, and/or managerial discretion and accountability for performance in operational management. The paper shows that the crisis led to major budgetary reform in all five case countries. It opened a window of opportunity for domestic reform proponents in Germany and to some extent also in Denmark. In the remaining three countries the crisis mainly became a juncture for reform through a process of coercive isomorphism mediated by EU institutions. The new fiscal rules and institutions necessitated centralisation of the budgetary process, not only in budgetary formulation and decision-making, but also in the implementation phase, as new rules and procedures were invented to coordinate budgetary implementation and make sure that budgets were kept. We find, however, little evidence that the budgetary reforms lead to the invention of new tools for centralised expenditure analysis and reallocation. Similarly, there is little evidence that they lead to increased flexibility and performance-orientation in operational public management.