“The new governance proposed by the Commission goes in the right direction, but risks of failing are high.”
After several months of informal negotiations, the European Commission proposed on 9 November a reform of the Stability and Growth Pact (SGP) to be debated. Only the broad outlines of the reform have been presented. The Commission has deliberately left the most politically sensitive details open. The reform of the fiscal rules must thus be adopted next year.
While investors’ eyes remain riveted on the timing and extent of the ECB’s monetary policy normalisation (key rates and balance sheet), it is on the fiscal policy side that tensions are most acute among Europeans.
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