Economic Governance in the European Union: Should Fiscal Stability Outweigh Economic Growth in the Stability and Growth Pact?

This Article will initially discuss the genesis of the Stability and Growth Pact (“SGP”) in 1996-1997. The second section will analyze the legal structure of the legislation adopted in 1997 to enforce the stability aspect of the SGP, i.e., the Multilateral Surveillance Regulation (“MSR”) and the Initial Excessive Deficit Regulation (“EDR”). Next, the Article will briefly review the operational disputes over the application of the EDR to France and Germany in 2002-2003, culminating in the impasse at the November 25, 2003 Ecofin Council meeting. The following section will first summarize and then analyze the Court of Justice\u27s judgment in 2004 in the suit between the Commission and the Council concerning the Ecofin Council\u27s failure to take further action in the proceedings against France and Germany under the EDR, and the Council\u27s conclusions taken as an alternative to such action. The principal revisions to the SGP regulations adopted in 2005 will then be briefly described and analyzed. The conclusion will present some reflections on the lessons to be drawn from the story in this Article, particularly on whether fiscal stability and economic growth should properly receive equal weight in the SGP