Fiscal policy in the EU faces the dilemma of having to meet large spending needs despite the existence of elevated public debt ratios. Fiscal policy therefore needs to put the member states on a sustainable path to gradual debt reduction.
Reforming Economic and Monetary Union: Balancing Spending and Public Debt Sustainability
Institut der deutschen Wirtschaft (IW)
Fiscal policy in the EU faces the dilemma of having to meet large spending needs despite the existence of elevated public debt ratios. Fiscal policy therefore needs to put the member states on a sustainable path to gradual debt reduction.
The Stability and Growth Pact (SGP) is the decisive mechanism in the EU to ensure that this is the case. The European Commission’s proposal to reform the SGP is, in theory, a step in the right direction. However, it has some major practical shortcomings: among others, it permits a long adjustment period and grants considerable political discretion to the European Commission. To seize the theoretical opportunities the reform offers, the proposal needs to be depoliticised. To this end, independent institutions should have a more important role. Moreover, common quantitative benchmarks should be introduced as safeguards to limit the political discretion allowed. With a basic public debt sustainability analysis, we find that even in the baseline scenario the public debt ratio is likely to increase in some big member states such as France. In our two more pessimistic scenarios most member states analysed would see their public indebtedness rise, with the notable exceptions of Greece and Portugal. In such a situation, a sovereign debt crisis could arise. In this case there would not be sufficient capacity to meet the transformative spending required in the years ahead. A sound reform of the SGP is therefore a vital building block when considering how to square the circle of high public expenditure needs with the existing high public debt ratios.
Reforming Economic and Monetary Union: Balancing Spending and Public Debt Sustainability
Institut der deutschen Wirtschaft (IW)

Trumps reziproke Zölle: EU nur punktuell betroffen
Eine Angleichung der US-Zölle an das Niveau der US-Handelspartner wäre ein Schock für viele Entwicklungs- und Schwellenländer. Für die EU würde sie insgesamt nur einem Anstieg des durchschnittlichen Zollsatzes zwischen etwa 0,5 und 1,7 Prozentpunkte ...
IW
Der Europäische Binnenmarkt: Ein neuer Anlauf
Der Europäische Binnenmarkt ist inzwischen schon mehr als 30 Jahre alt. Er hat den freien Verkehr von Personen, Waren, Dienstleistungen und Kapital innerhalb der Europäischen Union (EU) zum Ziel. Es gibt jedoch immer noch Hindernisse für diese vier Freiheiten. ...
IW