The European Union fiscal policy framework and fiscal sustainability: challenges for the post-crisis environment

The fiscal policy framework in the European Union was originally agreed upon in the Maastricht Treaty 30 years ago. In the following years it has been supplemented (Stability and Growth Pact) and modified, influenced by the experience of its application practice and external shocks, such as the financial crisis. However, the essence of this framework remained the same - member states are obliged to conduct a disciplined fiscal policy, which, in a nutshell, is assessed by comparing the ratio of budget deficit and public debt to GDP in a given country to the reference values. Even before the outbreak of the Covid-19 pandemic, the need to change the mechanisms for disciplining fiscal policy was widely recognized. High and persistent levels of public debt, pro-cyclicality of fiscal policy, shortage of public investment and the complexity of fiscal rules and their weak enforceability are indicated as unfavorable features of public finance. In 2019 the COVID-19 pandemic came as the biggest shock to the world community since World War II. In the context of the provisions on fiscal discipline, in May 2020 the Commission and the Council activated the general escape clause of Stability and Growth Pact, for the first time ever. This has allowed member states to take the necessary fiscal measures to deal with the crisis. On 19 October 2021, the European Commission adopted a Communication relaunching the public consultation, put on hold in March 2020, on the EU?s economic governance framework. The new governance framework should be tailored to the challenges the EU is facing, including the challenge of achieving a fiscal stance that is appropriate for the euro area as a whole. There is a fairly widespread belief in the need to move away from rigid reference values, which should be replaced by solutions that ensure the sustainability of public debt in the differing circumstances of member states. The proposed options for the revision of the EU fiscal framework, although justified in theory, have a fundamental flaw - they strengthen the position of supranational institutions and, moreover, open the door to discretion and potentially unequal treatment of member states. These proposals can be seen in a broader context - the federalization of the EU, which would limit the sovereignty of nation states.

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Why 3 and 60 per cent? The rationale of the reference values for fiscal deficits and debt in the European Economic and Monetary Union

European Journal of Economics and Economic Policies Intervention ◽

10.4337/ejeep.2020.02.01 ◽

2020 ◽

Vol 17 (2) ◽

pp. 111-126

Author(s):

Jan Priewe

Keyword(s):

Fiscal Policy ◽

Interest Rates ◽

Reference Values ◽

Public Debt ◽

Output Growth ◽

Policy Framework ◽

Budget Deficits ◽

The European Union ◽

Growth Pact ◽

Fiscal Compact

The origins of the reference values for budget deficits and public debt (3 and 60 per cent of GDP) in the euro area are explored. Both numbers came into the Maastricht Treaty by coincidence. Later attempts to legitimise them are traced and found unconvincing. In particular the debt cap is scrutinised, often considered as a precondition for debt sustainability. Since the first overhaul of the Stability and Growth Pact in 2005, reference values for structural deficits became the focus of fiscal policy, but derived from the 60 per cent debt cap. With the so-called Fiscal Compact from 2012, caps for structural deficits were added to the semi-primary law of the European Union. It is argued that the reference values for deficits and debt are not consistent. If the Domar equation is observed, the changing relationship between interest rates on public debt and output growth should be included in the fiscal policy framework. Therefore ‘eternal’ reference values for deficits and debt should be removed from the primary law by Treaty amendments.

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THE EUROPEAN UNION AND ITALY RELATIONS IN THE CONTEXT OF SUPRANATIONAL FISCAL REGULATION

RSUH/RGGU Bulletin Series Economics Management Law ◽

10.28995/2073-6304-2021-3-208-221 ◽

2021 ◽

pp. 208-221

Author(s):

Dmitrii О. Mikhalev ◽

◽

Egor’ A. Sergeev ◽

Keyword(s):

European Union ◽

Budget Deficit ◽

Stability And Growth Pact ◽

The European Union ◽

Internal Factors ◽

Growth Pact ◽

Discretionary Fiscal Policy ◽

The Government ◽

The Stability ◽

The Eu

The article presents a retrospective analysis of relations between the government of Italy and the European Union institutions in the context of supranational fiscal regulation in 2002–2019. The authors analyze the influence of external and internal factors on the state of public finance in Italy, note the reasons that made it difficult to meet the requirements of the Stability and Growth Pact, study the main issues on the agenda in the EU-Italy relations and their evolution. The authors also come to conclusion that unlike the earlier discussions about correcting budget deficit in Italy, current focus of supranational fiscal governance is shifted to preventing it, what challenges the economic sovereignty of Italy and country’s opportunities to conduct a discretionary fiscal policy.

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General government deficit and public debt in EU member states

Oeconomia Copernicana ◽

10.12775/oec.2011.016 ◽

2011 ◽

Vol 2 (4) ◽

pp. 29-41

Author(s):

Michał Wielechowski

Keyword(s):

European Union ◽

Public Debt ◽

Budget Deficit ◽

The European Union ◽

Member States ◽

Public Finances ◽

Eu Member States ◽

General Government ◽

Government Deficit ◽

The Eu

The aim of this article is the presentation and the attempt to analyse such phenomena as: an excessive general government deficit and public debt in EU Member States over the past 3 years. For the European Union the years 2008-2010 were the time when public finances of most member countries worsened dramatically. The average budget deficit in the EU increased during that period to a value of almost 7% compared to gross domestic product and public debt reached almost 80% of GDP. Referring the numbers to the principles of the budgetary policy in the Treaty on the European Union (the deficit should not exceed 3% in relation to GDP and public debt – 60% of GDP), the observance of budgetary discipline has been significantly violated. In consequence, the excessive deficit procedure has been initiated. in relation to almost all the countries of the EU, Its purpose was to force the member countries to take concrete actions to stabilize public finances. The economic crisis that began in the second half of 2007 in the United States of America which resulted in a significant deterioration of the finances of all the EU member countries might be regarded as the major source of violation of their budgetary discipline. The reactions of most governments TO the harmful effects caused by the financial crisis were to stimulate national economies and stem the decline of domestic demand. The higher level of public expenditures was simultaneously the cause of increased budget deficits,. To develop and present the problem of an excessive budget deficit and public debt in the EU countries some statistical methods were used and the data source statistics were mainly carried out by the European Commission and the European Statistical Office.

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Economic Policy Coordination in the European Union

National Institute Economic Review ◽

10.1177/0027950103183001462 ◽

2003 ◽

Vol 183 ◽

pp. 66-77 ◽

Cited By ~ 22

Author(s):

Iain Begg ◽

Dermot Hodson ◽

Imelda Maher

Keyword(s):

European Union ◽

Economic Policy ◽

Policy Coordination ◽

Stability And Growth Pact ◽

The European Union ◽

Growth Pact ◽

The Eu ◽

Formal Rules

There are differing views about the need for economic policy coordination in the EU and about the adequacy of the system that has evolved under EMU. This article examines the case for such policy coordination, then describes and assesses the current arrangements for both ‘hard’ coordination — epitomised by the much-maligned Stability and Growth Pact (SGP) — and the ‘soft’ forms of coordination that have evolved in the EU to complement formal rules. Although the system achieves more than is sometimes recognised, it is shown to have weaknesses. Options for reforming the SGP and other facets of the system are discussed.

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The Influence of Fiscal Rules on the Fiscal Stability in the EU Member States

European Journal of Economics and Business Studies ◽

10.26417/ejes.v8i1.p212-224 ◽

2017 ◽

Vol 8 (1) ◽

pp. 212

Author(s):

Ryta Iwona Dziemianowicz ◽

Aneta Kargol-Wasiluk

Keyword(s):

Fiscal Policy ◽

Public Debt ◽

Budget Deficit ◽

National Level ◽

Fiscal Rules ◽

The European Union ◽

Fiscal Discipline ◽

Member States ◽

Eu Member States ◽

The Eu

Due to the rapid increase of the budget deficit and public debt in many the EU countries after 2008, fiscal policy has faced a significant challenge for developing an appropriate tools to strengthen fiscal discipline and thereby improve the quality of public finance. Institutional mechanisms such as among others numerical fiscal rules play an important role in maintaining the fiscal discipline and support fiscal credibility of the state. Fiscal rules are most often defined as permanent constraints on fiscal policy, expressed by indicators introducing a limit for a particular fiscal aggregate, such as a budget deficit (real or structural), public debt, public expenditure or public revenue. The theoretical objective of the article is to analyze the institutional dimension of numerical fiscal rules (their type, legal basis, transparency, complexity, flexibility, adequacy and coherence). The empirical purpose, on the other hand, is to conduct a statistical analysis and to examine the relationship between the value of the fiscal rules index and the level of budget deficit and public debt in 28 Member States of the European Union. Examining the effectiveness of applied fiscal rules, at both European and national level seems to be the most valuable part of the analysis.

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CHARACTERISTICS OF THE EU BUDGET AND ITS IMPACT ON MEMBER STATES

ASJ. ◽

10.31618/asj.2707-9864.2021.2.55.139 ◽

2021 ◽

Vol 2 (55) ◽

pp. 29-32

Author(s):

F. Vojtech

Keyword(s):

European Union ◽

Fiscal Policy ◽

The European Union ◽

Member States ◽

Priority Areas ◽

General Terms ◽

The Eu

The aim of this paper is to analyze the European Union budget and its sources of income. Characterized headings of the EU budget, which reflect the priorities set for the seven-year period (2014-2020). In addition, it is also about budgeting under the fiscal policy. In the following section, we describe in detail the structure of income and expenditure in general terms. Finally, we pay attention to the structure of the payments and commitments for the financial year 2018 and 2019 as well as the funding of priority areas of the EU budget

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Political aspects of security of the European Union Member States

10.31338/1641-2478pe.3.20.6 ◽

2020 ◽

pp. 97-105

Author(s):

Aleksandra Kusztykiewicz-Fedurek

Keyword(s):

European Union ◽

Negative Impact ◽

The European Union ◽

Member States ◽

Eu Member States ◽

Political Security ◽

New Institutions ◽

The Stability ◽

Key Aspects ◽

The Eu

Political security is very often considered through the prism of individual states. In the scholar literature in-depth analyses of this kind of security are rarely encountered in the context of international entities that these countries integrate. The purpose of this article is to draw attention to key aspects of political security in the European Union (EU) Member States. The EU as a supranational organisation, gathering Member States first, ensures the stability of the EU as a whole, and secondly, it ensures that Member States respect common values and principles. Additionally, the EU institutions focus on ensuring the proper functioning of the Eurozone (also called officially “euro area” in EU regulations). Actions that may have a negative impact on the level of the EU’s political security include the boycott of establishing new institutions conducive to the peaceful coexistence and development of states. These threats seem to have a significant impact on the situation in the EU in the face of the proposed (and not accepted by Member States not belonging to the Eurogroup) Eurozone reforms concerning, inter alia, appointment of the Minister of Economy and Finance and the creation of a new institution - the European Monetary Fund.

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The promotion of security sector reform strategies: Comparing the roles of the European Union and Canada

Canadian Journal of European and Russian Studies ◽

10.22215/cjers.v3i2.2438 ◽

2007 ◽

Author(s):

Antoine Vandemoorteele

Keyword(s):

European Union ◽

International Organizations ◽

Policy Framework ◽

The European Union ◽

Security Sector Reform ◽

Security Sector ◽

Post Conflict ◽

The Eu ◽

Common Policy

This article analyzes the role of the European Union (EU) and Canada in the promotion of Security Sector Reforms (SSR) activities in two regional organizations, the Organization for Security and Cooperation in Europe (OSCE) and the North Atlantic Treaty Organization (NATO). The concept of SSR seeks to address the effective governance of security in post-conflict environment by transforming the security institutions within a country in order for them to have more efficient, legitimate and democratic role in implementing security. Recent debates within the EU have led to the adoption of an SSR concept from the Council and a new strategy from the European Commission on the SSR activities. Within the framework of the ESDP, the EU has positioned itself as a leading actor, in this domain, including in its crisis management operations. On the other hand, Canada, through its whole-of government and human security programs has also been an important actor in the promotion of SSR activities. Yet, even though several international organizations (including the United Nations, the OSCE and NATO) are effectively doing SSR activities on the ground, there does not exist a common framework within any of these organizations despite the role of the EU and Canada. As such, it is surprising to found no global common policy for SSR while this approach is precisely holistic in its foundations. Taking these elements into consideration, this paper analyzes two specific aspects : a) the absence of a common policy framework within international organizations and b) the major differences between the approaches of the OSCE and NATO in the domain of SSR and the implications for the EU and Canada’ roles. Full extt available at: https://doi.org/10.22215/rera.v3i2.186

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Review by Constitutional Courts of the Obligation of National Courts of Last Instance to Refer a Preliminary Question to the Court of Justice of the EU

German Law Journal ◽

10.1017/s2071832200021301 ◽

2015 ◽

Vol 16 (6) ◽

pp. 1663-1700 ◽

Cited By ~ 3

Author(s):

Clelia Lacchi

Keyword(s):

European Union ◽

Eu Law ◽

The European Union ◽

Constitutional Courts ◽

Member States ◽

Constitutional Review ◽

National Courts ◽

Court Of Justice ◽

Judicial Remedy ◽

The Eu

The Constitutional Courts of a number of Member States exert a constitutional review on the obligation of national courts of last instance to make a reference for a preliminary ruling to the Court of Justice of the European Union (CJEU).Pursuant to Article 267(3) TFEU, national courts of last instance, namely courts or tribunals against whose decisions there is no judicial remedy under national law, are required to refer to the CJEU for a preliminary question related to the interpretation of the Treaties or the validity and interpretation of acts of European Union (EU) institutions. The CJEU specified the exceptions to this obligation inCILFIT. Indeed, national courts of last instance have a crucial role according to the devolution to national judges of the task of ensuring, in collaboration with the CJEU, the full application of EU law in all Member States and the judicial protection of individuals’ rights under EU law. With preliminary references as the keystone of the EU judicial system, the cooperation of national judges with the CJEU forms part of the EU constitutional structure in accordance with Article 19(1) TEU.

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