Behind the scenes of a two-stage game Dynamics between the European Commission and the Council in fiscal enforcement in the EU

Abstract

This study is about the role of the European Commission in enforcing the fiscal rules of the Stability and Growth Pact (SGP). The SGP was established in the 1990s with the purpose of maintaining fiscal responsibility among Member States. However, the SGP has been violated frequently, which raises questions about its enforcement. Although both the European Commission and the Council are responsible for the enforcement of the fiscal rules, this research takes a specific look at the role of the Commission, as this role remains underexposed. This research aims to shed light on the methods of the Commission with regard to how it acts upon the interests of the Council, by closely examining the excessive deficit procedure (EDP) for Portugal that took place between 2009 and 2017. The results of this study find that the Commission does take into account the Council’s preferences, but that this does not very heavily impact the course of the EDP because of the rather weak position that the Council is in. Furthermore, conflicts between the Commission and the Council seldomly occur, as the preferences of both institutions are quite well aligned. These results contribute to understanding the enforcement of the SGP and therefore the policy outcomes that can be expected. It also serves as input for discussing the enforcement mechanism within the broader structure of European economic governance.