The new EU fiscal rules will restrict budget policy

Significance The new 'economic governance framework' preserves the debt and deficit limits but changes the method of assessment and toughens procedures for bringing states back into compliance, over four or seven years. Impacts Nation-specific fiscal adjustment paths will differ depending on their public debt ratio and projected interest rates and GDP growth. Accusations of politicisation and double standards will be rife in bilateral negotiations over nation-specific fiscal adjustment paths. It is questionable whether the move away from the 'one-size-fits-all' policy remedies the complexity and lack of transparency of EU rules. Simultaneous fiscal contraction in several large member states could have unintended damaging consequences for overall EU economic growth.