Jacques Delors (1925-2023) took an uncompromising look at the economic and monetary union (EMU) whose economic aspect, to use his words, was the Achilles heel. The laborious compromise between “spending” and “frugal” states on the reform of the Stability and Growth Pact (PSC), which comes into force in 2024, seems to support this diagnosis.
At the origin of the EMU, the hypothesis prevailed that the convergence of economies and respect by States for a code of good conduct authorized minimalist macroeconomic coordination based on peer pressure and the setting of reference standards – 60 % and 3% of gross domestic product (GDP) for public debts and deficits – then supplemented by a structural deficit target and an objective of reducing debts exceeding 60% of GDP by one twentieth per year.
These rules have hardly been respected (one time in two on average, one time in five by France or Italy, etc.). The 3% ceiling was regularly lowered, structural balances ignored and public debts diverged sharply. Community macroeconomic surveillance has also proven incapable of preventing the imbalances that led to the eurozone crisis of 2010-2014. The EMU survived thanks to the European Stability Mechanism and the mobilization by the European Central Bank (ECB) of anti-fragmentation instruments, in a role of last resort insurer of the integrity of the euro zone.
The failure of PSC has often been attributed to the complexity rules or their overly coercive nature, from which certain States were able to evade when others complied with them (the latter being those where GDP per capita has increased the most since 1999). The theoretical or empirical relevance of the references of 3% and 60% of GDP was also discussed. But we must rather admit a failure in the overall economic governance of the euro zone, the guarantees offered by the ECB creating a moral hazard that is not conducive to respect for collective discipline.
National ownership
The stated objectives of the reform of the PSC were to simplify it and facilitate its “appropriation” by the States. However, the first objective is far from being achieved. States whose deficit and debt exceed 3% and 60% of GDP will present multi-annual spending programs guaranteeing “plausible” the sustainability of their debt over a four-year horizon (and seven years if they undertake structural reforms consistent with the Union’s objectives). These programs must ensure an annual reduction of 0.5% to 1% in debt ratios (depending on whether they exceed 60% or 90% of GDP), while preserving a margin of 1.5% compared to the threshold of 3 %.
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