The New EU Economic Governance Framework: Principle, Policy, and Enforcement

This article critically analyses the new European Union (EU) framework for fiscal and economic
governance from the perspective of the previous regime’s flaws and the new regime’s stated objectives. It is structured as follows. We first trace the evolution of the EU fiscal and economic governance framework since the Eurozone crisis and outline the key provisions of the EU Treaties and secondary law (the previous Stability and Growth Pact). We then turn to consider the revised EU fiscal rules, as the core element of the new framework on which the reform—and the policy debate that preceded it—principally focused. We will chiefly focus on the preventive and corrective arms of the Stability and Growth Pact, as well as the role of independent fiscal institutions and the European Fiscal Board. Our analysis section examines the new framework from the perspective of the on-going quest for simplification and for strengthening national ownership, enforcement, and accountability. It will be seen that the new reforms have improved upon the EU fiscal and economic governance framework in various ways but that significant challenges remain.