Economic policies and quality of life : a study of risks & impacts in small EU member states

Abstract

The years which brought the World to a standstill and, which led to global social and economic disruptions, including mass cancellations of events, lockdowns and the largest economic recession were followed by the Russia–Ukraine war, and the resulting energy crisis and inflationary pressures. Governments had to act fast to recover from all these emergency situations which although one may be prepared with the Country’s Cris Management Plan, no one could ever prepare well for such situations happening at the same time. The results of a Country’s economic policy give a positive or negative outlook, which can be compared to other Countries. But are these figures enough to understand the Quality of Life within that Country. This dissertation investigates the economic policy responses of three small European Union member states - Malta, Cyprus, and Luxembourg - to the major shocks the World faced in the past 5 years. It critically examines the extent to which these responses, aligned with EU strategic frameworks (including the Recovery and Resilience Facility, the European Green Deal, and the Sustainable Development Goals) and evaluates their impacts on the quality of life of citizens. Using a comparative mixed-methods approach, the research draws on national and EU-level quantitative data (including GDP growth, unemployment, inflation, debt, housing and energy poverty) and qualitative analysis of policy documents, government strategies, and social outcomes. The findings show that while all three countries demonstrated resilience and policy agility, the benefits of economic recovery were unevenly distributed. Vulnerable groups—such as low-income households, migrants, and youth—continued to face housing stress, energy insecurity, and rising inequality. This study contributes to a growing body of literature that challenges the traditional focus on GDP as the primary indicator of national progress. The experiences of Malta, Cyprus, and Luxembourg during the turbulent years of 2020–2025 demonstrate that resilience is multidimensional, and that public policy must prioritize not only recovery and growth, but also social inclusion, housing stability, environmental sustainability, and energy justice. The combination of limited market size, high external dependence and fiscal pressure requires constant innovation and public governance. For a better Quality of Life, apart from a robust economic policy, policy makers need to take into consideration areas which are directly affecting individual households such as affordable living, stable jobs, better mental health facilities and care, environmental and social justice, together with future confidence and intergenerational fairness. As the European Union continues to navigate the twin transitions of green and digital transformation, alongside ongoing geopolitical tensions, the lessons from these small states offer timely insights into how to build equitable and sustainable societies in a rapidly changing world. It shows the importance of linking economic stability to well being, quality of life and contentment.