New study: Volker Wieland and the Kronberger Kreis on the reform of fiscal rules in the euro area

In its new study, the Kronberger Kreis has analyzed the European Commission's proposal for a reform of the fiscal rules and comes to the conclusion: "Better no reform of the fiscal rules than a bad reform". The members of the Kronberger Kreis, including Prof. Volker Wieland, warn that the European Commission's proposals for a reform of the EU fiscal rules would tend to weaken the debt sustainability of individual member states and the stability of the monetary union.

In particular, the economists criticize that the EU proposal would allow the highly indebted member states to increase their public debt instead of providing incentives to consolidate public budgets. At the presentation of the study, Volker Wieland emphasized the strategic dilemma of the eurozone: "Without a change in this incentive, there is a risk of overburdening the more solid member states or ending the stability of the common currency if the currently less indebted states are no longer willing to remain fiscally sound and instead also take on higher public debt."

The Ecofin Council of EU finance ministers will discuss the reform of the economic governance framework at its meeting in December. In April, the EU Commission presented legislative proposals for a reform of the fiscal rules of the Stability and Growth Pact, which are intended to make the rules more flexible, transparent and binding and strengthen economic governance elements at EU level.

The Kronberger Kreis, the scientific advisory board of the Market Economy Foundation, includes Prof. Lars P. Feld as spokesman as well as Prof. Clemens Fuest, Prof. Justus Haucap, Prof. Heike Schweitzer, Prof. Volker Wieland and Prof. Berthold U. Wigger.

Kronberger Kreis, Studie Nr. 72: "Flexibilität statt Solidität? Zur Reform der europäischen Fiskalregeln"