The 1997 Stability and Growth Pact was to be renewed and improved with the so-called "six-pack". The realisation that the Stability and Growth Pact had obviously not provided stability and growth led in 2011 to five EU Regulations and one EU Directive.
In 2011, 24 of 28 EU countries were subject to deficit procedures.
Together they established new fiscal rules that make it easier for the EU to impose penalties for non-compliance. The current and acute background was that, in 2011, 24 out of 28 EU Member States were subject to excessive deficit procedures. Permanent breaches of the law had become normal in the euro system.
The rules relating to total debt levels in particular were tightened. To date, countries have been allowed to borrow around 3% of GDP annually, irrespective of their total debt level, which is no longer permitted under the "six-pack" rule. If a country's total public debt exceeds 60% of GDP, that country's share of debt in excess of 60% must be reduced by 5% annually. These countries can therefore no longer invoke the 3% rule.
In order to better control the national budgets, the Member States should coordinate their budget planning with the EU before the national decision is taken. If the measures are not observed, the Commission may impose sanctions that do not have to be approved by the Council of Ministers. Only a qualified majority of the Council of Ministers may prevent these sanctions, which should make them almost automatic. The penalty can be a fine of up to 0.2% of GDP. Until 2018, however, despite several breaches, no EU Member State had been sanctioned – either for breaches of the Stability and Growth Pact or for breaches of the six-pack. Even targeted breaches, as announced by Italy and France for 2019, will not result in sanctions.
When EU Commission President Juncker was asked in Paris in June 2016 why Paris was granted exemptions from the six-pack rules, he replied:
Because it's France.
List of references for the used photos:
- Cover photo: Volker Heinecke
- Photo: Hans-Olaf Henkel