Introduction to the book 

Why writing a book on the relationship between public finance law and public administration? Why has public finance law become central to the study of public administration? Why does the European Union represent a context in which this connection has become increasingly stronger? These are just some of the questions I asked myself when I began researching in the field of public finance and writing the book “Public finance law and Public Administrations. The Shaping Power of Public Finance in the European Union” (Routledge, 2025). 

The core issues, discussed in my book can be summarized in the following questions: why are public finance at the heart of the state? How do financial rules impact national administrative systems? Which are the consequences of the “shaping power” of public finance? And what are the perspectives? 

Public finance and the administrative state 

There is a close relationship between public finance and state: the former is the engine that drives the administrative machine. This relationship can be considered from at least three different perspectives (see my book, pp. 1 ff.).  

First, the state, and, especially, the administrative apparatus, is expensive. In other words, the first reason for the relationship between public finance and public administrations is the maintenance of public power and its apparatus at the service of the emperor or the sovereign. Only later were public finance considered to serve the people represented by parliaments, becoming the instrument of liberalism and of the rule of law, safeguarding individual freedoms.  

Second, the state, or, specifically, the contemporary state, provides public services in a market context. Historically, this emerged with the transition from the model of mere “guarantee administration” to “performance administration”, as defined by Ernst Forsthoff (Leistungsverwaltung – Daseinsvorsorge)¹. From this perspective, public resources are necessary to finance the provision of services for the community (healthcare, education, social assistance, transport, etc.). The dimensions of public finance have consequently grown, with the affirmation of the “welfare state” and the increasing development of collective interests².  

Third, public finances are a means of administrative action considered as a whole. After all, without the engine, the machine cannot move. Financial instruments are not only closely connected to public administrative action but also constitute its essence. Through financial decision-making and management, it is possible to provide goods and essential services to the community. In this sense, public finances are the set of instruments through which public authorities carry out their allocative or distributive functions.  

In other words, public finance law is the core of the administrative state. Currently, the centrality of public finance law in the activity of public administrations, and consequently administrative law, is even greater, for at least two reasons. The first is the process of EU integration, especially through the creation of the monetary union. This entailed the establishment of precise constraints and financial rules at the EU level, the application of which was entrusted mainly to national public administrative bodies in the Member States. The second reason why public finance law has assumed a pivotal position in public administrative activity concerns the recent economic global crises, which also involved the EU. The great economic crises of recent decades, such as the one resulting from the COVID-19 pandemic, have highlighted even more how the EU Member States’ stability and capacity for recovery and development depend, first and foremost, on the ability to direct and manage public resources, in two opposing directions: on the one hand financial austerity; on the other hand, the “cascade of resources”. In both cases, the financial framework played a preliminary role, constituting the framework within which public administrations were required to implement reform plans³.  

Both of the EU monetary policy and economic global crises can be considered “exogenous” factors with respect to the state. These phenomena not only have enormous impacts on the subject matter of administrative law (the organization of the administration, the civil service, administrative procedures, institutional relations, etc.) but also on the configuration of this branch of law in relation to the legal system, as a whole. Administrative law has become the “site” where the rules of national administrative action and the needs of public finance, increasingly dependent on exogenous factors, are reconciled. From this perspective, administrative law today contains the “point of balance” between the specificities of national systems and the financial conditioning resulting from multifarious external sources. This tendency has fuelled the “living dimension” of this branch of law, whose evolution aligns with that of the relationship between public institutions and civil – today, global – society.  

How financial rules impact national administrative systems 

A particular expansive force characterized the legal dimension of public finance over time: public finance regulation has expanded over a decade, fuelled by the direct correlation between the extent of crises and the interventions of the EU and national regulatory powers. The financial rules and measures considered are, primarily, those adopted by EU institutions as well as the national rules and acts transposing and implementing these supranational measures in Member States⁴. The overall trend has left, and is still leaving, significant signs on the administrative system at both supranational and domestic levels.  

First, public finance rules bear effects on the configuration of public powers. The centrality of EU monetary policy objectives, to the detriment of the democratic configuration of the “power of the purse”, emerges. This feeds a paradox: public finance rules, historically characterized by democratic values, become increasingly less democratic instruments, to the point that a real democratic deficit in financial regulation arises, moreover affecting the exercise of the power of the purse⁵.  

Moreover, the public finance regulation also influences institutional aspects and the distribution of financial power. On the latter point, such a phenomenon has been observed in Anglo-Saxon legal systems (but not only in these systems), where the extent of financial authority delegated to executive governments increase and economic emergencies denude parliaments of all meaningful financial authority.  

Second, there are significant impacts on the balance and relationships among public powers. The “castle” of EU financial rules effectively disempowers national parliaments, strengthening national central banks and, especially, executives (treasury departments). This is evident in the regulation of monetary finance and policy: it delegates significant authority and decision-making power over monetary finance to the EU, especially the European Central Bank and, in a cascading manner, to national central banks. Such rules also define rigid parameters related to sovereign borrowing and delegate the power to issue public debt (debt financing power) to governments.  

The strengthening of the executive branches, and above all of the administrative apparatus at national and supranational levels, has become even clearer in light of the new weight of the EU rules that imply, by virtue of various factors, the administrative and technical co-management of national public policies by EU institutions, through (or thanks to) financial leverage. 

Last, the most interesting effects of public finance regulation directly concern the public administration. First of all, financial rules deeply affect both the configuration and the functioning of the public administration. This type of impact is particularly noticeable and mainly concerns the quality and accessibility of activities (functions and services), the scope of the public administration, the dimensions of the administrative organization and the number of civil servants. Some cases referable to different national systems are paradigmatic (Portugal, United Kingdom, Denmark, Ireland, Spain, France, Italy, Greece and Germany), in light of the phenomenon under examination⁶. 

Other impacts regard the relationships between the public administration and the social and political dimensions. In particular, financial rules have an impact on the relationships between the public administration and the community. They affect the public administration’s ability to satisfy general public interests and to protect particular types of fundamental rights (think, among many examples, of the case of social security and health care).  

Public finance rules affect how the public administration interacts with other public authorities, at both national and supranational levels. Overall, financial rules tend to strengthen the role of the public administration compared to the political bodies that operate in parliament but also in the government itself. They also affect the relationship between the public sector and private powers. 

From this perspective, a new transnational phenomenon emerges, namely the conditioning force of financial rules and measures on national administrative systems and public policies. I have coined the term “shaping power” to define this conditioning force. I have constructed a theory related to the tools on which the shaping power is based, how the power works, the context within which it arises and the relationships between the shaping power and certain administrative law reforms⁷.  

The consequences of the “shaping power” of public finance and perspectives 

In addition to these characteristics, the effects of the “shaping power” are highly relevant. In particular, does the shaping power produce benefits, or does it exacerbate the dysfunctions affecting the public administration of EU Member States? In other words, does the shaping power improve or worsen the performance of public administrative bodies?  

The shaping power of public finance has not been – nor is – inherently “evil”. It does not adversely affect public administration – quite the contrary. Therefore, the answer is not absolute; it depends on the specific perspective of public administration.  

At the same time, the analysis does not present an idyllic picture. While the implementation of EU public finance rules and measures does not imply an inherent evil, it has generated various problems⁸. In particular, the shaping power gives, or tends to give, a specific form to public administration in the Member States where these rules apply. EU financial rules seek to implement, in Member States, the “public administration model” that the EU considers the “best”: not only does the “model” not correspond to the one existing in various Member States, but above all, it is the result of discretionary choices made by EU institutions and, more precisely, by the technical experts of the Commission.  

EU financial rules should be conceived not only considering the aim of EU financial integrity and eurozone stability, but should also bear in mind the purposes of improving national public administrations. This requires detailed, timely and systematic analyses and impact assessments of EU financial rules on the public administration in each Member State, year by year. Moreover, this would require introducing an obligation for Member States to provide the information needed to carry out such analyses, based on stable mechanisms and procedures for interaction between national governments and the Commission (as in the implementation of the national recovery and resilience plans).  

Developing such assessments would, in turn, contribute to the formulation of European public policies, giving rise to a virtuous cycle, also in the implementation of the Multiannual Financial Framework(s). The current progress of EU public finance law would allow for an assessment and analysis spanning almost the last 20 years, evaluating the impact of EU financial rules and measures on the specific components of national public administrations.  

In conclusion, this would contribute to the development of a European integration that starts from the bottom up and is increasingly aware of the “internal voices” of national administrative systems in the Member States. 

Posted by Professor Elisa D’Alterio – Faculty of Law, University of Catania (Italy), Director of the FinPA Observatory (Observatory on Public Administration and Public Finance)