The Stability and Growth Pact Germanising the Euro

Abstract

The Stability and Growth Pact (SGP) was agreed upon by the European Union Member States in 1997 to maintain and enforce fiscal discipline in the EU. Applying the agenda-theory approach, this paper seeks to explain how the German government was influenced by domestic actors such as the German Central Bank, parties, labour unions, and employers' associations during the negotiations. The evolution of the SGP was strongly influenced by the ideas, interests and ideologies of the German media democracy. Our findings show that the SGP constituted a political instrument that was implemented to overcome the German public's scepticism of a united Europe. While many of the domestic actors played critical roles during the process, the German Central Bank, assisted by the Federal Government, was of paramount importance during the negotiations. Germany's leading role in the SGP negotiations can be explained by the European-wide acceptance of its exemplary decades-long stabilisation policy.