Let’s talk about debt baby, let’s talk about EU and me – Explaining EU Public Opinion on Fiscal Policy

Abstract

What drives individuals’ fiscal preferences, and what are these preferences even? This paper investigates whether the public prefers Keynesian or cyclical management by linking economic performance to the public’s attitude to government deficits and borrowing. Common EU debt through the NextGenerationEU package marks a remarkable shift in how the EU’s founding treaties are interpreted and opens the door to even further centralisation of fiscal policy. Hence, a large-scale quantitative study that investigates the drivers of public opinion and aggregates opinions regarding debt across the bloc is salient. A large-scale quantitative analysis indicates that public opinion has largely been cyclical in the past decade, but the effect depends on how economic performance is operationalised. GDP growth is the most potent factor in affecting fiscal preferences, and opinions based on growth follow a cyclical trend. Ideology also plays a role in affecting attitudes, with left-wing individuals more likely to elicit a preference for Keynesian policy.