The EU Fiscal Compact: Constitutionalization of Austerity and Preemption of Democracy in Europe

Abstract

In the article on the EU Fiscal Compact we are trying to show that the Fiscal Compact as adopted in its current form does not necessarily lead to the improved quality of fiscal policy in the Eurozone. At the same time it disproportionally interfers with the autonomous fiscal policies of the member states and with their constitutional arrangements. In combination with the indiscriminatory implementation of austerity policy across EU the Fiscal Compact may further supress socio-economic developments in many of the EU countries and their regions. We are of the opinion that the Fiscal Compact in its current form – if adopted and strictly implemented as envisaged – may further deteriorate the socio-economic situation in many parts of the EU. Alternatively, we propose more decentralized approach toward fiscal consolidation in the EU member states and their regions. Such an approach would be more tailored to the different needs and different situations and would allow more proactive development approach for many local communities, regions and member states in the EU. Therefore, more bottom-up instead of top-down approach to fiscal consolidation and to more inclusive, more balanced and more diverse development may be viewed as an alternative approach to the EU integration process.