The controversy over the effective methods of ensuring fiscal discipline in the European Union

Abstract

Economic and financial crisis has led to the disclosure of many imperfections of the system of economic management in the European Union, and established fiscal rules did not prevent the debt crisis in EMU. Not only there was a rapid deterioration in fiscal indicators in all countries of this group, the course of the crisis also proved that the excessive levels of debt can be a serious threat to the -fiscal sustainability than high budget deficit indicators. The aim of this paper is to present measures used after the crisis to ensure the disturbed balance budget at the EU level, to assess their effectiveness and discussions on the possibility of ensuring fiscal discipline effectively especially in the euro area composed of countries with very diverse culture of fiscal sustainability. The analysis shows that the reformed fiscal rules still do not meet many of the conditions of the so-called. good and effective fiscal rule. On the one hand, it increased flexibility of regulations, which allows to take into account the diversity of the economic situation in individual member states. On the other hand, there has been a significant complexity of the rules, making it difficult to verify the degree of respect by member states. Furthermore the politicization of decision-making and the lack of effective instruments to ensure the necessary adjustment of fiscal policies in the Member States, they mean that solutions are not however, sufficient to effectively ensure fiscal stability in the long run In view of the extreme controversy about the direction of reform and conditions to avoid difficult decisions by the EU institutions, finally, at a relatively high preferences of sovereignty in the area of fiscal policy, the most important factor in maintaining fiscal discipline in the long run is the presence of the culture of fiscal sustainability in individual countries.