Governing public investment in Europe: The politics of off-balance-sheet policymaking, the rise of Eurostat and contrasted regional policies in Belgium

This paper focuses on a neglected yet crucial feature of public investment policies in the European Union (EU): the politics of statistical harmonization and off-balance-sheet policymaking. Drawing upon the instrument-centred approach and the sociology of quantification and accounting, it refines the concept of ‘fiscal ecosystem’ by highlighting the controversial and evolving nature of the boundary between on- and off-balance-sheet recording. It is argued that the accounting aggregates giving effect to EU fiscal rules favour marketized and privatized modes of public service delivery, including ‘market-based but state-led’ off-balance-sheet investment tools such as public–private partnerships. However, the effectiveness of this policy has decisively hinged upon the work of harmonizing public finance statistics carried out by Eurostat, the Statistical Office of the EU. This contested process has led to acute power struggles between statistical agencies and governments, and a substantial increase of Eurostat’s power in the wake of the Eurozone crisis. The comparison of the two main Belgian regions highlights contrasting responses to this European strategy of governing (sub)national investment policies through fiscal rules and statistical harmonization: while Flanders has consolidated the financialization of its investment policy, Wallonia has so far opposed this trend. This demonstrates that although financialization of public investment is promoted by EU fiscal integration, it is not inevitable; governments do have some leeway to follow an alternative path. As Wallonia also benefited from extraordinary economic and political circumstances, it remains to be seen whether its distinctive investment policy will withstand rising interest rates and tighter fiscal rules.