263

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Publication type
Author
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Date

How could the Stability and Growth Pact be simplified?

23-04-2018

Past reforms of the Stability and Growth Pact (SGP) have improved its economic rationale, but this progress has come at the expense of simplicity, transparency and, possibly, enforceability. This study surveys and evaluates reform models that could reduce complexity without compromising the SGP’s indispensable flexibility. From a holistic perspective, the greatest potential for simplification will result from a shift of discretionary power to an independent fiscal institution. Independence is a substitute ...

Past reforms of the Stability and Growth Pact (SGP) have improved its economic rationale, but this progress has come at the expense of simplicity, transparency and, possibly, enforceability. This study surveys and evaluates reform models that could reduce complexity without compromising the SGP’s indispensable flexibility. From a holistic perspective, the greatest potential for simplification will result from a shift of discretionary power to an independent fiscal institution. Independence is a substitute for complexity. With a narrower focus on the potential streamlining of the SGP and a reduction of excess complexity, first, the preventive and corrective arms could be integrated into one procedure. Second, this integrated procedure should be centred on a net expenditure rule that is combined with a debt feedback mechanism and a memory for expenditure overruns. Third, further fiscal indicators that are currently treated as parallel targets (headline deficit rule and structural balance) could be downgraded to non-binding reference values. And fourth, the planned transposition of the Fiscal Compact into European law should follow SGP reforms in order to promote consistency between European and national fiscal rules.

External author

Friedrich Heinemann

How could the Stability and Growth Pact be simplified?

23-04-2018

The complexity of the SGP, which may have contributed to its limited effectiveness, reflects largely the conflict between the need to make the original SGP rules more stringent and the desire to allow flexibility with respect to various country circumstances. Now that the effects of the largest economic shock since the 1930s are fading away, a major simplification of the system could be achieved by removing some margins of flexibility, while possibly relaxing some of the SGP long-term parameters. ...

The complexity of the SGP, which may have contributed to its limited effectiveness, reflects largely the conflict between the need to make the original SGP rules more stringent and the desire to allow flexibility with respect to various country circumstances. Now that the effects of the largest economic shock since the 1930s are fading away, a major simplification of the system could be achieved by removing some margins of flexibility, while possibly relaxing some of the SGP long-term parameters. The coexistence of the MTO rule and the expenditure benchmark could also be reconsidered. A more radical solution would involve shifting to a single rule in which an “operational target” would respond to deviations of public debt from its long-term objective.

External author

Carlo Cotterelli

How could the Stability and Growth Pact be simplified?

23-04-2018

An assessment of the present SGP fiscal rules reveals a significant deterioration in simplicity, undermining their effectiveness. In fact, in both design and process, they have become the most complex worldwide. Three options for future reform are offered to correct this deficiency. Under the first, the structural balance and the debt convergence targets are replaced with a debt-stabilizing or -reducing primary surplus target, while retaining the expenditure benchmark. The second consolidates all ...

An assessment of the present SGP fiscal rules reveals a significant deterioration in simplicity, undermining their effectiveness. In fact, in both design and process, they have become the most complex worldwide. Three options for future reform are offered to correct this deficiency. Under the first, the structural balance and the debt convergence targets are replaced with a debt-stabilizing or -reducing primary surplus target, while retaining the expenditure benchmark. The second consolidates all current rules into a single operational debt rule by setting a limit on the discretionary budget deficit, derived from the debt reduction target. The third option consists of a market-based approach, inspired by the oldest and most successful subnational fiscal frameworks.

External author

George Kopits

The role of national fiscal bodies: State of play (April 2018)

10-04-2018

This briefing provides an overview of the role played by national fiscal institutions in the preparations of forthcoming budgets in EU Member States. As part of the scrutiny of the implementation of the economic governance framework in the European Union, the objective of the briefing is twofold: 1) to give and overview of the extent to which the Stability or Convergence Programmes and the Draft Budgetary Plans contain information about the involvement of independent national fiscal bodies in the ...

This briefing provides an overview of the role played by national fiscal institutions in the preparations of forthcoming budgets in EU Member States. As part of the scrutiny of the implementation of the economic governance framework in the European Union, the objective of the briefing is twofold: 1) to give and overview of the extent to which the Stability or Convergence Programmes and the Draft Budgetary Plans contain information about the involvement of independent national fiscal bodies in the preparation of these programmes/plans; and 2) to give an overview of the current set-up and role of these independent fiscal bodies based on the most recent assessment by the European Commission.

The role of national parliaments in the European Semester for economic policy coordination

05-04-2018

This briefing summarises the findings of a survey on the role of national parliaments in the European Semester for economic policy coordination. The survey was conducted by the Economic Governance Support Unit of the European Parliament between 30 January and 8 February 2018.

This briefing summarises the findings of a survey on the role of national parliaments in the European Semester for economic policy coordination. The survey was conducted by the Economic Governance Support Unit of the European Parliament between 30 January and 8 February 2018.

Economic governance

01-04-2018

Economic governance refers to the system of institutions and procedures established to achieve Union objectives in the economic field, namely the coordination of economic policies to promote economic and social progress for the EU and its citizens. The financial, fiscal and economic crises that began in 2008 showed that the EU needed a more effective model of economic governance than the economic and fiscal coordination in force until then. Developments in economic governance include reinforced coordination ...

Economic governance refers to the system of institutions and procedures established to achieve Union objectives in the economic field, namely the coordination of economic policies to promote economic and social progress for the EU and its citizens. The financial, fiscal and economic crises that began in 2008 showed that the EU needed a more effective model of economic governance than the economic and fiscal coordination in force until then. Developments in economic governance include reinforced coordination and surveillance of both fiscal and macroeconomic policies and the setting-up of a framework for the management of financial crises.

Outlook for the meetings of EU leaders on 22-23 March 2018

21-03-2018

On 22 and 23 March 2018, the EU Heads of State or Government will convene in four different formations with varying compositions and levels of formality: a regular meeting of the European Council, a Leaders’ meeting on taxation, a Euro Summit and a European Council (Article 50) meeting. The agenda of the formal European Council includes single market issues, the European semester, social policy and international trade relations. Following the recent announcements by the US administration on trade ...

On 22 and 23 March 2018, the EU Heads of State or Government will convene in four different formations with varying compositions and levels of formality: a regular meeting of the European Council, a Leaders’ meeting on taxation, a Euro Summit and a European Council (Article 50) meeting. The agenda of the formal European Council includes single market issues, the European semester, social policy and international trade relations. Following the recent announcements by the US administration on trade matters, the latter issue is likely to take a more prominent place than originally expected. The informal Leaders’ meeting will focus exclusively on taxation, in particular in the digital economy, whilst the Euro Summit will discuss further developments in the euro area, banking union and the gradual completion of Economic and Monetary Union (EMU). At the European Council (Article 50) meeting, EU-27 leaders are due to adopt guidelines for the framework for the future relationship between the EU and the United Kingdom (UK).

Selected Euro Area Macroeconomic Indicators

13-03-2018

This table prepared by the Economic Governance Support Unit includes Euro Area key indicators and latest forecasts from the Commission, IMF, ECB and OECD.

This table prepared by the Economic Governance Support Unit includes Euro Area key indicators and latest forecasts from the Commission, IMF, ECB and OECD.

Special Reports of the European Court of Auditors - A Rolling Check-List of recent findings

13-03-2018

This rolling check-list presents an overview of the Special Reports of the European Court of Auditors (ECA), concentrating on those relevant for the 2016 discharge procedure. It strives to link the research topics of the Special Reports to relevant debates and positions within the European Parliament, including the working documents of the Committee on Budgetary Control, the work of the specialised parliamentary committees, forthcoming plenary resolutions and individual questions by Members. This ...

This rolling check-list presents an overview of the Special Reports of the European Court of Auditors (ECA), concentrating on those relevant for the 2016 discharge procedure. It strives to link the research topics of the Special Reports to relevant debates and positions within the European Parliament, including the working documents of the Committee on Budgetary Control, the work of the specialised parliamentary committees, forthcoming plenary resolutions and individual questions by Members. This check-list has been prepared by the Ex-Post Evaluation Unit of the European Parliamentary Research Service (EPRS), the EP's in-house research service and think-tank, as part of its on-going support for parliamentary committees and individual Members in scrutinising the executive in its implementation of EU law, policies and programmes. The European Parliament is strongly committed to Better Law-Making, and particularly to the effective use of ex-ante impact assessment and ex-post evaluation throughout the entire legislative cycle. It is in this spirit that the Parliament has a particular interest in following the transposition, implementation and enforcement of EU law, and, more generally, monitoring the impact, operation, effectiveness and delivery of policy and programmes in practice.

Country Specific Recommendations for 2016 and 2017 - A comparison and an overview of implementation

12-03-2018

This document presents the Country Specific Recommendations for 2016 and 2017 as well as the assessment of the implementation of 2016 Country Specific Recommendations.

This document presents the Country Specific Recommendations for 2016 and 2017 as well as the assessment of the implementation of 2016 Country Specific Recommendations.

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