Eu Fiscal Policy: the Need for Flexibility in Times Of Crisis
Volume 45, Issue 1 (2025), pp. 58–70
Pub. online: 18 March 2025
Type: Article
Open Access
Open Access
Published
18 March 2025
18 March 2025
Abstract
The introduction of the Maastricht criteria was a crucial step in ensuring fiscal discipline and economic stability in the European Union. However, the crises of recent decades, including the Great Recession, the sovereign debt crisis, the Covid-19 pandemic, and the energy crisis, have revealed the limitations of these rules. Strict fiscal requirements have hindered countries’ responses to economic challenges, highlighting the need for a more flexible and adaptive fiscal policy to better withstand future economic shocks. The aim of this paper is to evaluate the effectiveness of the European Union’s fiscal rules over the 20-year period, analysing GDP growth differences between the EU and the Eurozone, as well as the fiscal performance of individual member states. It also seeks to
classify countries in groups based on economic indicators, identifying those with varying growth rates and levels of effectiveness in managing public finances. The study has revealed differences in GDP growth patterns between the European Union and the Eurozone, with the EU showing more favourable results. In analysing data from 27 EU member states over the 20-year period, four clusters were identified based on economic performance and fiscal policies: catching-up, slow-growing, underperforming, and cutting-edge countries. New members after 2004 demonstrated rapid growth, while countries like Ireland and Luxembourg stood out by their effective economic policies.