Your consultant

In topic Economic & Fiscal Policy:

Dr. Matthias Kullas

Head of Division

+49 761 38693-236


Alessandro Gasparotti

Policy Analyst

+49 761 38693-238


Dr. Anja Hoffmann, LL.M. Eur.

Policy Analyst

+ 49 761 38693-247


Economic & Fiscal Policy

The economic and fiscal policies of the Member States are coordinated at EU level during the European semester. Coordination of economic policy takes place inter alia by way of country-specific recommendations which the Council puts to the Member States. Coordination of fiscal policy takes place by way of the Stability and Growth Pact and the annual review of the national draft budgets. cep analyses EU policy in these areas.

Investment Stabilisation Function (Regulation)



With a “European Investment Stabilisation Function” eurozone countries experiencing an economic shock are to receive loans and interest subsidies to finance public investment. That, at least, is the Commission’s proposal to further stabilise the eurozone.

20 Years of the Euro: Winners and Losers



20 years after the introduction of the euro, cep has analysed which countries have gained from the euro and which ones have lost out. This involved an analysis of how high the per-capita GDP of a specific eurozone country would have been if the euro had not been introduced.

Reform Delivery Tool (Regulation)



As part of a Reform Support Programme, the Commission plans to make available around € 22 billion to EU Member States for structural reforms. For this purpose, the EU Commission has proposed a Regulation.

Technical Support for Structural Reforms (Regulation)


The EU Commission wants to support structural reforms in the Member States in order to strengthen their macroeconomic resilience in the event of crises. The Commission intends to stabilise the euro area and to support euro-area candidate countries with introduction of the euro. For this purpose, a realignment and an increase in funds for the “Structural Reform Support Programme” is proposed.

Reform Delivery Tool to Support Structural Reforms (Regulation)


The EU Commission wants to introduce a “reform delivery tool” to provide financial support for structural reforms in the Member States and test it in a pilot phase. In cep’s view, financial support by way of the reform delivery tool may facilitate necessary structural reforms and thereby improve the stability of the eurozone.

cepDefault-Index Greece 2018


Greece is still not creditworthy. The country has received €289 billion in financial assistance for eight years, but there is still a long way to go to regain its creditworthiness. This is the result of the updated cepDefault-Index on the occasion of the expiry of the third EU adjustment programme for Athens on 20 August.

EU Finance Minister (Communication)


With the creation of an EU Finance Minister, the European Commission wants to improve coordination of economic policy in the EU. With this aim, he will combine three offices into one - EU Commissioner for Economic and Monetary Union, Chair of the Eurogroup and Chair of the Board of Governors of the European Monetary Fund.

Stabilisation Function (Communication)


The EU Commission wants to use a "stabilisation function" to protect Member States, and particularly eurozone countries, from the consequences of an economic shock. For this purpose, it has submitted a Communication which has been taken up by the German grand coalition. Although the stabilisation function reduces the risk of a state having to apply for financial aid, cep nevertheless takes a critical view of the idea.

cepDefault-Index 2018


As the cepDefault-Index shows, the trends in creditworthiness over the last year have varied between the eurozone countries. Thus the ability to repay debts of two-thirds of eurozone countries (including Germany) is steadily increasing whilst in others it has been falling continuously or is already lost.

cepDefault-Index Greece and Portugal


The creditworthiness of Greece and Portugal continues to decline. This is the conclusion reached by cep, which has just updated its Default-Index for these two countries. In the case of Greece, the three rescue packages undertaken since 2010 have, in cep’s view, done nothing to change this. Sooner or later, Greece will therefore need a fourth rescue package.

cepDefault-Index United Kingdom


The United Kingdom's creditworthiness is declining. This is the result of the latest cepDefault-Index 2017. The main reason for the decline is the population’s high propensity to consume: since 2012, the population of the United Kingdom has consumed more than the total available income. Moreover, the competitiveness of the British economy declined for years.

cepDefault-Index 2017


The turmoil threatening the very existence of the EU continues. Evidence for this is provided by the cepDefault-Index 2017. The cep authors point out that Greece in particular remains uncreditworthy and that there is no sign of any reversal in the trend. Apart from Greece; Italy, Latvia, Portugal, Slovenia and Cyprus indicate declining creditworthiness which has in addition become firmly established.

Redistribution between the EU Member States


Calculating redistribution in the European Union has so far been based exclusively on the EU budget. Its figures are used to determine the "net recipients" and "net contributors". In cep's view, this falls short. A comprehensive Study now shows which countries profited most from the redistribution instruments in the EU between 2008 and 2015.

cepDefault-Index 2016


The cepDefault-Index 2016 shows that for a large number of eurozone countries - Finland, Slovenia, Italy, Portugal, Cyprus and Greece - falling creditworthiness has become firmly established; a development which sooner or later will result in creditworthiness being lost altogether. Another danger is looming in that many eurozone economies are seeing a diminution of capital stock.

Completing Economic and Monetary Union 4: Political Union


The EU wants to strengthen "economic policy coordination, convergence and solidarity" in the eurozone. It therefore proposes the creation of four Unions: an Economic Union, a Financial Union, a Fiscal Union and a Political Union. This cepPolicyBrief deals with the Political Union which covers strengthening parliamentary control in the European Semester, the unified external representation of the eurozone in the IMF and the establishment of a "Treasury".

Completing Economic and Monetary Union 3: Fiscal Union


The EU wants to strengthen "economic policy coordination, convergence and solidarity" in the eurozone. It therefore proposes the creation of four Unions: an Economic Union, a Financial Union, a Fiscal Union and a Political Union. This cepPolicyBrief deals with the Fiscal Union which involves the establishment of a European Fiscal Board and the creation of a "macroeconomic stabilisation function".

Completing Economic and Monetary Union 2: Financial Union


The EU wants to strengthen "economic policy coordination, convergence and solidarity" in the eurozone. It therefore proposes the creation of four Unions: an Economic Union, a Financial Union, a Fiscal Union and a Political Union. This cepPolicyBrief deals with the Financial Union which comprises a Capital Markets Union and a Banking Union supplemented by a common deposit guarantee scheme.

Completing Economic and Monetary Union 1: Economic Union


The EU wants to strengthen "economic policy coordination, convergence and solidarity" in the eurozone. It therefore proposes the creation of four Unions: an Economic Union, a Financial Union, a Fiscal Union and a Political Union. This cepPolicyBrief deals with the Economic Union. Economic Union involves the creation of independent National Competitiveness Boards as well as stronger focus on employment and social policy.

A sovereign default regime for the eurozone


The European requirements for economic reform and consolidation are being ignored in many capitals. The eurozone countries openly disagree on what role the market should play as a mechanism for ensuring discipline and coordination. To overcome this dilemma, the eurozone should agree on a sovereign default regime for its member states.

Investment Plan for Europe


The EU-Commission has put forward an “Investment Plan for Europe” which is to trigger Investment of up to € 315 billion. The plan entails the establishment of an European Fund for Strategic Investments (EFSI) and an “investment advisory hub” at the European Investment Bank. Also, the Commission aims at improving the investment environment.

Future of 1 and 2 euro cent coins (Communication)


The Commission is considering four options for the future of 1 and 2 cent coins. These range from continued issuance of small coins to reducing the production costs of small coins to abolition of small coins.

The Social Dimension of the Economic and Monetary Union (Communication)


Within the framework of the European Semester, the Commission wants to improve the surveillance and coordination of developments in social and employment policy. In addition, it wants to make EU funds available to combat unemployment and improve cross-border cooperation between employment services. It is also calling for an autonomous budget to absorb asymmetric shocks and the transfer of legislative competence regarding social policy to the EU.

cepDefault-Index 2014


The updated cepDefault-Index shows that the creditworthiness of the individual crisis countries is developing in different directions. The same applies to the core Eurozone countries.

In the group of crisis countries, Ireland and Spain make a positive impression as the creditworthiness of both countries is increasing. Unlike Greece, which is still a long way from regaining its creditworthiness. In Italy too, the erosion of creditworthiness continues.

In the group of core countries, Belgium and Finland are showing a reduction in creditworthiness for the first time. In France, a clear reversal of the downward trend in creditworthiness is still not apparent.

The cepDefault-Index 2014 is divided into two sections: The creditworthiness trends for Belgium, Finland, France, Greece, Ireland, Italy, Portugal and Spain are presented with detailed explanations.  The creditworthiness trends for the remaining euro and EU countries, as well as other economies such as Switzerland, South Korea and the USA, are set out in the Annex.

Governance of Economic Policy Reforms (Communication)


The Commission intends to govern economic policy reforms of Member States more strongly. It wants to introduce a „Convergence and Competitiveness Instrument“ that commits Member States to the implementation of reforms for financial support in turn. Moreover the Commission wants to establish „ex ante coordination for major economic policy reforms“ in EU law.

Roadmap Towards a "Genuine" Economic and Monetary Union (Report)


The four Presidents of the European Council, the Commission, the Eurogroup and the European Central Bank (ECB) have proposed measures to improve the stability of the Euro Zone.

cepDefault-Index 2013


The updated cepDefault-Index makes clear that the euro crisis has not been averted. The Index shows that, with the exception of Ireland, the crisis countries in receipt of financial assistance have not succeeded in halting the decline in creditworthiness. Italy’s creditworthiness has been deteriorating continuously since 2009. The reforms implemented so far are insufficient.

Moreover the creditworthiness of France is under threat. Even if the French situation is not yet as dramatic as in the southern European countries, it still requires an urgent course correction. A drop in France's creditworthiness could place the entire Euro rescue package in doubt therefore the trend in French creditworthiness is of significant importance for the future development of the Euro Zone.

Fiscal Correction Mechanism (Communication)


The Fiscal Compact of 2 March 2012 obliges the Contracting Parties to introduce a debt brake into national law. Amongst other things, it provides for a correction mechanism obliging the Contracting Parties directly in case of default. Thus the budgetary discipline of Contracting Parties is to be strengthened. The Commission proposes seven principles which the Contracting Parties should take into in shaping national laws.

cepDefault Index – 2012 Update for the GIPS countries


South-Europe’s creditworthiness keeps eroding as demonstrated by the latest assessment of the cepDefault Index. Italy’s erosion consolidated in 2011; as regards Greece, the negative trend did not only continue but declined even further; Spain is somewhat crumbling but – apart from the banking crisis – not doing too badly.

In Portugal, however, the vigorous structural reforms now bear fruit – an upward trend is soon to emerge. It is very likely that Portugal will regain its full creditworthiness in 2015.  

All other South-European countries need to improve their competitiveness through structural reforms too.

Monitoring of Budget Policy and Strengthening the Deficit Procedure (Regulation)


The Commission intends to intensify the surveillance of national EU budget policy and to develop the deficit procedure. Moreover, euro states are to be obliged to transpose European budget requirements stipulated under the Stability and Growth Pact into national law. Moreover, national budgets must be based on independent macroeconomic forecasts in future.

Fiscal Compact


The EU Heads of State and Government (apart from Great Britain and the Czech Republic) entered into an agreement to improve the budgetary discipline of the Contracting Parties. The Contracting Parties undertake to transpose a debt brake into their national legal systems and to facilitate the imposition of sanctions in the deficit procedure.

Measures for Financially Unstable Euro Countries (Regulation)


On the one hand, the Commission wishes conduct enhanced surveillance of euro countries, which might need to request financial assistance in future. On the other hand, the Commission wishes to see the tasks assigned by the bail-out package enshrined in secondary EU legislation.

Eurobonds (Green Paper)


The Commission presents three options for the implementation of Eurobonds and puts up for discussion the related pros and cons. With regard to the pros it mentions in particular the alleviation of the current debt crisis, the stabilisation of the banking system and the increased liquidity of the government bonds market. With regard to the cons it mentions the reduced incentives for budgetary discipline. For instance, Member States can run up debts at the expense of the budgetary discipline of other Member States, without this having an affect on their financing costs.

Reform of the European Financial Stability Facility (EFSF)


As a reaction to serious tension on the financial market, on 21. July 2011, the heads of states and governments of the euro zone decided to amend the existing EFSF. The objective of the amendments is to increase the operative volume of the EFSF and to provide it with new legal instruments.

cepDefault-Index 2011


The euro zone currently finds itself in an existential crisis. The increasingly dramatic rescue measures that have been taken to save over-indebted euro states from insolvency have failed, without exception, to calm the situation. There are growing concerns about further countries being swept aside with it. Therefore, the cep has developed a fact-based Default Index reflecting the erosion of creditworthiness in euro zone member states.

Reform of the Stability and Growth Pact


The current Euro crisis is mainly rooted in the Member States excessive public debts. Consequently, settling the problem of debt should be at the heart of crisis management. To this end, the Commission published a reform package on 29 September. It encompasses amendments to the Stability and Growth Pact and, at the same time, a macroeconomic surveillance flanking the Pact. Thus the Commission wishes to ensure that, in future, the Stability and Growth Pact will be applied in a more efficient, sharper and more thorough manner.

Requirements Concerning the Financial Restructuring of the Euro Countries


The main causes of the Euro crisis lie in the irresponsible indebtedness policy of the affected Euro states and in the real economy structures which threaten not only the creditworthiness of those states but of entire economies.

First "European Semester" (Communication)


The “European Semester“ serves to contribute to the yearly ex-ante economic policy coordination of Member States. On the basis of National Reform Programmes, the EU issues country-specific recommendations for action. The implementation of these measures is to eliminate macro-economic imbalances and to serve the targets of the “Europe 2020” strategy.

First Annual Growth Survey (Communication)


The Commission’s first Annual Growth Survey marks the start of the first “European semester”. The “European semester” is an ex-ante policy coordination procedure between the 27 Member States. Consequently, the Survey contains recommendations for future economic policy and fiscal measures in Member States. The implementation of these measures is to support economic recovery as well as achieving the targets of the “Europe 2020” strategy.

Industrial Policy (Communication)


Forgoing “major spending programmes“ and focussing on the establishment of efficient framework conditions is reasonable from an ordoliberal standpoint. However, they should apply equally to all companies. Therefore, the Commission should forgo sector-specific measures; they bear the potential for competitive distortion.

Economic Policy Coordination (Communication)


The EU is to be entitled to monitor and avoid “macroeconomic imbalances” in and between Member States. Furthermore, it is to be entitled to carry out a “thematic surveillance“ in order to ensure that Member States comply with the “Europe 2020 targets”. A reform of the Stability and Growth Pact is to safeguard that Member States consolidate their state budgets sufficiently. In addition, the EU is to be entitled to coordinate the economic policies in Member States. To this end, a “European Semester” is to be established.

Guidelines for the Economic Policies of Europe 2020 (Recommendation)


Within the framework of the Europe 2020 strategy, Member States agreed to improve there coordination of their economic policies. To this end, the Commission recommends to the Member States guidelines to harmonise their economic policies. In shaping their economic and fiscal policies and in developing national reform programmes, Member States should act in line with these guidelines.

Guidelines for the Europe 2020 Employment Policies (Decision)


Member States have agreed to improve the coordination of their employment policies, in the scope of the Europe 2020 strategy. To this end, the Commission presented to the Council guidelines for employment policies outlining the direction which educational, labour and social policies of Member States should take. The headline targets of the guidelines are identical to those proposed to the European Council within the context of the Europe 2020 strategy.

Key Enabling Technologies (Communication)


According to the Commission key enabling technologies are of “systemic relevance“ for the European economy and provide the basis for process, goods and service innovation. Therefore, a process is to be launched whose purpose is to identify and promote the key enabling technologies in the EU. The research base for the development of key enabling technologies in the EU is to be strengthened through “the right framework conditions and support instruments“.Synergy effects created by a better coordination of research promotion and joint action by Member States are assumed to be beneficial to European companies. The Commission promotes the establishment of an EU patent and a unified patent litigation system in Europe.

Gross Domestic Product (GDP) and Further Indicators (Communication)


The GDP was already developed in the 1930s. In the meantime it has become the best known indicator of macro-economic activity. According to the Commission there “is a clear case for complementing” GDP with indicators covering social and environmental issues “on which people’s well-being critically depends” but which are not taken account of in the current GDP calculation. In its Communication the Commission presents its ideas regarding new indicators.

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