Fiscal Problems in The Single Market Europe

The regulation of financial markets and companies in Europe has undergone significant changes over the last decade. The Commission, Member States, and Parliament constructed regimes that facilitate new legislation, sanction delegation to the Commission for financial market law, and structure the cross-border regulation of companies within the single market.

Recent times have seen a downgrading of the relevance of fiscal policy, as a result of both the current need to reduce high levels of public deficit and debt, and the dominance of neoclassical theories. The institutional framework and the rules of fiscal policy operating in the European Union are built upon this theoretical basis. The Maastricht Treaty has imposed the reduction of fiscal imbalances as the main objective of national fiscal policies. The fear for a relaxation of this fiscal discipline has then led to the approval of the Stability and Growth Pact (SGP), which was then reformed in 2005, in order to give more flexibility to national fiscal policies.