November 23, 2021

Position paper EU fiscal governance framework

At the request of the Dutch House of Representatives’ Standing Committee on Finance, CPB Netherlands Bureau for Economic Policy Analysis is participating in the Round Table on The Future of EU fiscal rules: reforming the Stability and Growth Pact (‘De toekomst van de Europese begrotingsregels: hervorming van het Stabiliteits- en Groeipact’). This position paper contains CPB’s contribution to the Round Table.

Economic and financial stability of the EMU is best served by simple fiscal rules that are geared to the medium term, such as the multiannual expenditure framework that is applied in the Netherlands. Such a framework should be in line with a long-term objective for debt sustainability. It is therefore important to choose a debt target that keeps the financial risks manageable and also represents a debt reduction pathway that is both feasible and credible for Member States with excessive debt levels. Effective enforcement is essential, in this respect.