Fiscal implications of the crisis and the future of the EU fiscal framework

This paper presents the fiscal implications of the crisis within a European context and suggests improvements to the EU fiscal framework in the light of the lessons learnt from financial crises and the consequences that these might have on fiscal sustainability, particularly given the ageing of the European population over the coming years. Indeed the consequences of demographic change are shown to be substantial. This paper suggests that the European fiscal framework take a broader view of fiscal risks in the future, that its implementation focus more strongly on the quality of the adjustments that will be necessary in the coming year, and that enforcement of the Stability and Growth Pact be strengthened, in order to ensure that European public finances are best able to weather the challenges of the future.