01 Jul 1995

Towards a Credible Excessive Deficits Procedure

Daniel Gros

0
Download Publication

1838 Downloads

In 1995, when this paper was written, Daniel Gros pointed out that the Excessive Deficits Procedure lacked a strong enforcement mechanism. In particular he noted that the normal enforcement mechanisms of the Treaty (i.e. recourse to the European Court of Justice) cannot be used to ensure that member states obey the prohibition of excessive deficits. Instead the entire excessive deficits procedure has been assigned to the ECOFIN Council, which (as he predicted correctly) has never been able to agree tough measures towards member countries that have clearly not followed its recommendations. Hence, Gros doubted that the prohibition of excessive deficits would be enforced effectively once EMU has started.

To strengthen the enforcement mechanism of the excessive deficits procedure, his paper contained the following concrete proposal:

"First, countries with an excessive deficit should be automatically required to sequester spending and increase taxes. Second, if they do not follow this last call to order, they should be relegated to an associated status in EMU. ECOFIN would have no discretion in this procedure and only the countries that are in EMU should be allowed to participate in these decisions."

Some elements of this proposal can clearly be seen in the tightening in the new governance rules which were adopted in 2010 and 2011.

The author, Daniel Gros, is the Director of CEPS.

Related Publications

Browse through the list of related publications.

A renewed EU approach for Jobs and Skills

Towards a Resilient and Sustainable Post-Pandemic Recovery Working Group Report of the New Industrial Strategy for Europe Task Force

Competition Policy and State Aid: Defining a sustainable path for Europe’s recovery

Towards a Resilient and Sustainable Post-Pandemic Recovery Working Group Report of the New Industrial Strategy for Europe Task Force

Healthcare and Pharmaceuticals

Towards a Resilient and Sustainable Post-Pandemic Recovery Working Group Report of the New Industrial Strategy for Europe Task Force

The Digital Transition

Towards a Resilient and Sustainable Post-Pandemic Recovery Working Group Report of the New Industrial Strategy for Europe Task Force

Strategic Value Chains

Towards a Resilient and Sustainable Post-Pandemic Recovery Working Group Report of the New Industrial Strategy for Europe Task Force

European Green Deal

Towards a Resilient and Sustainable Post-Pandemic Recovery Working Group Report of the New Industrial Strategy for Europe Task Force

Basel III Finalisation

The impact on EU banks and the real economy across scenarios

Managed Expectations

EU Member States’ Views on the Conference on the Future of Europe

Digital labour platforms in the EU

Mapping and business models