The Sound Of Economics

The sound of economics is a series of podcasts about economic policy, brought to you by Bruegel. Each episode will look at a key economic policy debate, discuss why it is important and explore some of the work that Bruegel's researchers have done in the area. This episode is about European fiscal rules. EPISODE 1 The strong fiscal tightening implemented in many European countries since 2010 has contributed to the poor economic recovery in Europe. This raises doubts about the effectiveness of the EU’s fiscal rules in achieving their two main objectives: public debt sustainability and fiscal stabilisation. A key indicator in the framework is the structural budget balance, but it is very difficult to measure. Recommendations made based on the structural budget balance are often revised when initial estimates turn out to be wrong. Another problem with the current EU fiscal framework is the opaque web of ‘flexibility’ clauses. This leads to never-ending bargaining between member states and the European Commi