Fiscal rules

Chapter 3 focuses on the fiscal rules of economic governance, mapping the procedures in place to ensure that member states conform to sound budgetary policy. In particular the author distinguishes between mechanisms of control which operate externally, at the level of the EU, from those entrenched internally, within the member states themselves. With regard to the external controls, he analyses in depth the Stability and Growth Pact (SGP) and its recent revisions through the so-called ‘Six Pack’ and ‘Two Pack’ and details the functioning of both its preventive and the corrective arms. Moreover, he discusses the sanctions mechanisms applicable in the Excessive Deficit Procedure, as well as the growing role of the European Commission in policing states’ budgets in the framework of the European Semester. With regard to the internal controls, then, the author emphasizes the importance of the obligation to constitutionalize a balanced budget amendment in national law resulting from the Treaty on Stability, Coordination and Governance in the EMU and refers to the possible future developments in this area, including the possible domestication of the Fiscal Compact in EU law.