Tanzi, V., (2004), 'The Stability and Growth Pact
. Its role and future', Cato Journal, vol.
Dear Editor, One of the many counterproductive pieces of legislation generated by the European Union is the dubiously named Stability and Growth Pact
. Intended, it is claimed, to prevent unfair competition by member governments giving financial support to privatelyowned businesses with failure to comply resulting in multi-million pound fines.
The Stability and Growth Pact
is a continuing source of economic controversy within Europe.
Interestingly enough, the European Fiscal rule--the so-called Stability and Growth Pact
(SGP)--is included in the Constitution and thus, reaffirmed after having been criticized.
It also stressed it was essential to strengthen parts of the eurozone's budgetary rulebook following the suspension late last year of the so-called Stability and Growth Pact
# Drastic cuts in public services have had to be made to adhere to the rigid rules of the Stability and Growth Pact
. Germany and Portugal are threatened with huge fines unless they make further cuts.
A weak economic outlook has prompted industrial heavyweights such as Germany and France to set budgets that breach the terms of the European Union's (EU) stability and growth pact
. This is the system that was designed to combat inflationary pressures across Europe and underpin the stability of the euro, so such diversions hold potentially serious consequences for economies across the EU and beyond.
Portugal currently has low unemployment but, due to the Stability and Growth Pact
, it is facing difficulties in paying government staff such as nurses and the armed forces.
Hungary was one of the first countries to be threatened with sanctions under a stepped-up Stability and Growth Pact
- which sets EU debt and deficit limits and was reformed under a six pack' of new laws on economic governance last year.
The European Commission launched in July last year an excessive budget deficit procedure against Bulgaria and 24 other EU member-states to ensure that the countries reduce swiftly their state spending, and keep their budget deficit below 3% of the GDP, as stipulated by EU's Stability and Growth Pact
. The excessive deficit procedure against Bulgaria was confirmed by the EU Council on July 13, 2010.
He alleged that by compromising the European Union's Stability and Growth Pact
in 2004, the two countries had caused budgetary discipline to slacken.