The policy responses to the Covid-19 pandemic underscored two interlinked issues in the EU fiscal surveillance framework: the failure or difficulty on the part of some member states to build fiscal buffers in good times, followed by the tendency to find new often improvised forms of flexibility in the implementation of the EU fiscal rules or through new elements of risk sharing when times turn bad. The latest European Fiscal Board annual report proposes a reform to the EU fiscal framework based on (1) a medium-term debt anchor; (2) an expenditure rule as the main policy instrument; and (3) a single escape clause applied on the basis of independent analysis.
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The policy responses to the Covid-19 pandemic underscored two interlinked issues in the EU fiscal surveillance framework: the failure or difficulty on the part of some member states to build fiscal buffers in good times, followed by the tendency to find new often improvised forms of flexibility in the implementation of the EU fiscal rules or through new elements of risk sharing when times turn bad. The latest European Fiscal Board annual report proposes a reform to the EU fiscal framework based on (1) a medium-term debt anchor; (2) an expenditure rule as the main policy instrument; and (3) a single escape clause applied on the basis of independent analysis.