European fiscal rules
The current European fiscal framework is inefficient and relies on indicators that are badly estimated. How can the rules be improved and what can a European fiscal council add to this?
The strong fiscal tightening implemented in many European countries since 2010 has contributed to the poor economic recovery in Europe. This raises doubts about the effectiveness of the EU’s fiscal rules in achieving their two main objectives: public debt sustainability and fiscal stabilisation.
A key indicator in the framework is the structural budget balance, but it is very difficult to measure. Recommendations made based on the structural budget balance are often revised when initial estimates turn out to be wrong.
Another problem with the current EU fiscal framework is the opaque web of ‘flexibility’ clauses. This leads to never-ending bargaining between member states and the European Commission about the implementation of the rules, which undermines trust in them.
A recent Bruegel policy contribution by Gregory Claeys, Zsolt Darvas and Alvaro Leandro analyses and assesses the framework and proposes a new set of rules.
Producers – Giuseppe Porcaro & Vanessa Cotterell
The current European fiscal framework and its flaws — until min. 07:50
Bruegel scholars propose new fiscal rules — from min. 07:50
Is a European fiscal council a good idea? — from min. 11:30
Gregory Claeys — Research Fellow, Bruegel
Zsolt Darvas — Senior Fellow, Bruegel
Jochen Andritzky — Secretary General of the German Council of Economic Experts
Filippo Taddei — Chief Economist of the Democratic Party, Italy
Presenters — Áine Quinn, Bryn Watkins, Bruegel