The recent economic and financial crisis, commonly dubbed the Great Recession, hit European economies hard in 2007. Indeed, the severity of this economic shock was huge – and partially unexpected. The financial crisis, caused by the accumulation of financial imbalances, subsequently triggered the European sovereign debt crisis: A situation in which government debt in some European countries became highly unsustainable and bond yield spreads rose rapidly.This series of events found the European Union largely unprepared. For the first time, the Union experienced the direct consequences of the imperfections of European integration, which had accumulated over the preceding decades. In this situation, which called for rapid policy responses, Europe’s reaction was slow, held back by its existing institutional shortcomings.