Germany, the Eurozone crisis and the Covid-19 pandemic: Failing forward or moving on?

This article explores continuity and change in Germany’s policy towards economic and monetary integration, comparing its approach to the Eurozone crisis with its response to the economic challenges of the Covid-19 pandemic. As the largest EU member state with significant macroeconomic relevance for the whole of the Eurozone, Germany presents a critical case during both episodes. The article adopts an historical institutionalist approach to exploring policy evolution, identifying the key interests and ideas that have driven German policy. The analysis is based on the ‘failing forward’ argument, applied to German domestic politics. German policy has evolved through an incremental layering process that both facilitated and constrained the architecture of the Eurozone. The Franco-German proposal for a reconstruction fund in May 2020 seemed to conflict with a long-standing German opposition to mutualising debt. The article argues that it in fact represented a further stage in the process (layering and conversion) rather than a critical juncture or paradigm change in policy. However, the resultant Recovery and Resilience Facility may prove to be another incomplete policy response due to the deepening consequences of the pandemic and the interventions of Germany’s Federal Constitutional Court.