Martin Švikruha

Type of the article: Research Article

Abstract
The COVID-19 pandemic represented a systemic shock to public finances in the European Union, as governments simultaneously faced revenue disruptions, expenditure pressures, and rapid debt accumulation. This study aims to identify and quantify the impact of the pandemic on public finances in European Union Member States and to assess fiscal resilience and long-term sustainability using the Public Finance Triangle, with particular emphasis on how stabilization policies affected its geometric area. The analysis is based on annual Eurostat data for all EU-27 countries covering the period 2011–2021. Year-on-year changes in public revenues, public expenditures, and public debt are integrated into a synthetic geometric indicator that captures their joint fiscal dynamics. The results show that in 2020, the average triangle area at the EU level declined from 14,518 units, representing the 2011–2019 average, to 12,777 units, which corresponds to a decrease of 11.99%. The strongest contractions were recorded in Estonia (−52.43%), Malta (−23.46%), and Lithuania (−22.45%), while the smallest declines were observed in Finland (−9.58%) and Sweden (−10.32%). In 2021, the average triangle area increased to 14,847 units, exceeding the pre-pandemic benchmark by 2.27%, and 20 out of 27 Member States surpassed their long-term averages. The strongest recoveries were observed in Cyprus (+14.34%) and Lithuania (+11.15%), with recovery driven primarily by public revenue dynamics. The findings confirm a universal deterioration of fiscal resilience in 2020 followed by a heterogeneous recovery in 2021, and provide policy-relevant implications for strengthening revenue capacity and ensuring sustainable debt management under future systemic shocks.

Acknowledgment
This paper has been supported by project VEGA 1/0265/25.