New Fiscal Rules for Europe?

Prominent French economists around President Macron are calling for a reform of the European Stability and Growth Pact, causing much excitement in Brussels and Berlin.


In a policy paper for the Conseil d’analyse économique (CAE), French economists Philippe Martin, Jean Pisani-Ferry and Xavier Ragot developed a reform proposal for the European fiscal framework. Among other things, they call for the abolition of the rigid percentage limits and the criterion of measuring debt on the basis of economic performance, to allow the individual member states more flexibility in their budget planning, and to achieve better fiscal policy coordination within the Eurozone by taking greater account of macroeconomic imbalances.

That French President Macron does not think much of the Stability Pact, which he described as a “relic of the 20th century”, is well known. The proposal of the French economists could now bring with it the necessary tailwind to implement a reform during the French Council Presidency in 2022. However, the attitude of other European states will be decisive for this – first and foremost Germany’s. How should the new German government position itself on this issue? This will be discussed next week at the VIII. New Paradigm Workshop in a session on 26 May 2021 from 5pm.

Two of the study’s authors, CAE President Philippe Martin and Centre national de la recherche scientifique (CNRS) Research Director Xavier Ragot, will first present their reform proposal. Participants in the subsequent discussion will be Margit Schratzenstaller, economist at WIFO and and member of the Austrian Fiscal Council, Annamaria Simonazzi, economics professor at the Sapienza University of Rome, the Head of the European Department at the Ministry of Finance Thomas Westphal, and the Bruegel Director Guntram Wolff. The session will be moderated by Martin Sandbu (Financial Times).

The original full proposal in French can be read here.

You can register for the workshop here.

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