Understanding Eu Fiscal Compact Essay examples

4784 Words Oct 22nd, 2014 20 Pages
The Fiscal Compact: A Pillar of Understanding:
In this project we will look at the Fiscal Compact Treaty which came into effect on the 1st of January 2013. Firstly, we will briefly outline the various factors that led to the signing of the Treaty. Following this we will assess the rules established under the Treaty and how the Treaty will impact future fiscal policy. Furthermore, we will compare and contrast which method of ratification, public referendum or a vote in parliament is more suitable for Ireland when it comes to deciding on EU matters, such as the Fiscal Compact. In addition to that we will interview a person who has strong convictions regarding the Fiscal Compact. To conclude, we will present our opinions and recommendations
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As financial problems began to sweep across the EU, plans were made to deal with the escalating crisis (Bartlett, 2011). A €100billion bailout deal was agreed between the EMU and Greece in October 2011 (Bartlett, 2011). However, the crisis continued to spread as rising borrowing costs and the worldwide credit crunch began to affect a number of larger Eurozone countries, particularly Italy and Spain (Anand, Gupta and Dash, 2012). The sovereign debt ratings of France, Hungary, Portugal and Belgium all fell during November 2011 (Bartlett, 2011). Anand, Gupta & Dash, (2012) highlight that “these developments began to threaten other Euro zone economies and even the future of the Euro”.

Furthermore, confidence in European assets continued to fall, even in financially stable countries. Germany could only manage to sell 50% of government bonds at an auction on the 23rd of November 2011 (Bartlett, 2011). Anand, Gupta and Dash (2012) note that although the Eurozone was a monetary union it was not a “fiscal union”. The same authors argue that this lack of fiscal unity was the core contributor to the Eurozone crisis. German Chancellor Merkel began spearheading a push towards tighter Eurozone regulations and the formation of a united fiscal union to combat the growth and spread of the Eurozone crisis (Bartlett, 2011). A proposed Fiscal Compact Treaty was

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