The Fiscal Governance of the European Union. From the Maastricht Treaty to the Reform of the Stability and Growth Pact

This book deals with the fiscal governance of the European Union (EU) from the Maastricht Treaty (1992) until the reform of the Stability and Growth Pact (2024). It examines the EU’s “fiscal regulation paradigm”: its main goal—assuring the sustainability of public finances—and the set of instruments used to achieve it, most notably the deficit and debt rules, the Excessive Deficit Procedure, and the related sanctions. The book identifies six phases that this regulatory paradigm went through: establishing (when it first emerged), securing (when it was confirmed), strengthening (when it became more restrictive), questioning (when it was criticized), suspending (when it was temporarily not applied) and reforming (when it was eventually changed). It advances two main arguments. Firstly, while the EU’s paradigm of fiscal regulation has changed over time, its main policy goal has remained the same. What we have seen is rather the emergence of a set of new “fiscal ideas”, meaning propositions suggesting a certain approach to the content, the scope of application, and the enforcement of the rules. Examples include uniformity, differentiation, automaticity and national ownership. From 1992 to 2024, EU fiscal regulation has arguably witnessed a trajectory of competing fiscal ideas. Secondly, France and Germany as the two most influential countries in EMU have been the main drivers behind change of the EU fiscal regulation paradigm. In particular, they have supported competing fiscal ideas and acted as “spokespeople” for other countries. The book explains the recent agreement on the reform of the Stability and Growth Pact as an outcome where Germany managed to secure the main goal of the EU’s fiscal regulation paradigm and then made concessions on new fiscal ideas to France and to Italy. It was this compromise on competing fiscal ideas that ultimately made the agreement on the SGP reform possible.