[9] The treaty states that the signatories shall attempt to incorporate the Fiscal Compact into the EU's legal framework, on the basis of an assessment of the experience with its implementation, by 1 January 2018 at the latest.

In October 2007, then ECB president, Jean-Claude Trichet, emphasised the need for the European Union (EU) to pursue further economic and financial integration within certain areas (among others, labour mobility and flexibility and reaching retail banking convergence).

[15] Angel Ubide from the Peterson Institute for International Economics joined this view, suggesting that long-term stability in the eurozone required a common fiscal policy rather than controls on portfolio investment.

The presidents of the ECB, Commission, Council and Eurogroup published a blueprint for a deep and genuine EMU in November 2012, outlining the elements of a fiscal union which could be achieved in the short, medium and long-term.

As such, the two reforms of the Stability and Growth Pact known as the sixpack (which entered into force December 2011) and twopack (planned entry into force in summer 2013), and the European Fiscal Compact (a treaty which largely mirrors these two EU reforms),[citation needed] represents, according to the authors of the Blueprint report, the first step towards the increased sharing and adherence to the same fiscal rules and economic policies, which they argue potentially paves the way for ratification in the medium term of a new EU treaty allowing for the common issuance of eurobills.

They argued that the previous Stability and Growth Pact needed to be reformed to become more strict and efficient, and in return a European emergency bailout fund should be founded to assist states in financial difficulties, with bailout payments available under strict corrective fiscal action agreements – subject to approval by the ECB and Eurogroup.

A call was also made to enforce the Coordination of economic policies between eurozone members, so that all states take an active part in each other's policymaking.

[23] As a part of the proposed reform of the Stability and Growth Pact, Germany also presented a proposal in May 2010 that all Eurozone states should be obliged to adopt a balanced budget framework law into its national legislation, preferably at the constitutional level, with the purpose of guaranteeing future compliance with the pacts promise of having a clear cap on new debt, strict budgetary discipline and balanced budgets.

Implementation of the proposed debt brake was by-itself envisaged to imply much tighter fiscal discipline compared to the existing EU rules requiring deficits not to exceed 3% of GDP.

In late 2010, proposals were made to reform some rules of the Stability and Growth Pact to strengthen fiscal policy co-ordination.

[34] In that perspective, strong European Commission "oversight in the fields of taxation and budgetary policy and the enforcement mechanisms that go with it could further infringe upon the sovereignty of eurozone member states".

Think-tanks such as the World Pensions Council (WPC) [fr] have argued that a profound revision of the Lisbon Treaty would be unavoidable if Germany were to succeed in imposing its economic views, as stringent orthodoxy across the budgetary, fiscal and regulatory fronts would necessarily go beyond the treaty in its current form, thus further reducing the individual prerogatives of national governments.

[36][37] On 9 December 2011 at the European Council meeting, all 17 members of the eurozone agreed on the basic outlines of a new intergovernmental treaty to put strict caps on government spending and borrowing, with penalties for those countries who violate the limits.

On 30 January 2012 after several weeks of negotiations, all EU leaders except those from United Kingdom and Czech Republic endorsed the final version of the fiscal pact at the European summit in Brussels,[42] though the treaty was left open to accession by any EU member state and Czech prime minister Petr Nečas said his country may join in the future.

[44] The new treaty was signed on 2 March and will come into force on 1 January 2013, if it has been ratified (which requires the approval of national parliaments) by at least 12 countries that use the euro.

[46] Only countries with such rule in their legal code by 1 March 2013 will be eligible to apply for bailout money from the European Stability Mechanism (ESM).

Title II defines its relation to EU laws and the Treaties of the European Union, applying the Fiscal Compact only "insofar as it is compatible".

Finally a tie exists to the European Stability Mechanism, which requires its Member States to have ratified and implemented the Fiscal Compact into national law as a pre-condition for receiving financial support.

The counter measures will only be outlined in general, identifying the size and the time-frame of the needed corrective action to be undertaken, while taking into consideration country-specific risks for fiscal sustainability.

Progress towards and respect of each specific state's Medium-Term budgetary Objective (MTO) shall be evaluated on the basis of an overall assessment with the structural balance as a reference, including an analysis of expenditure net of discretionary revenue measures.

The last column of the table reflects the status of compliant implementation laws, and denotes whether the Title III provisions (the "balanced budget rule" and "automatic correction mechanism") have been embedded into national legislation through an ordinary law subject to later revisions by simple majority, or also by a constitutional amendment of which later revisions will require a higher constitutional majority.

[68] The background color of the last column indicates whether or not the implementation law of the state is compliant with Title III, where green indicates compliance, while yellow and red indicate that existing national fiscal rules are non-compliant.

The first official independent assessment of the treaty compliance of the listed national implementation laws has been scheduled to be conducted by the European Commission in September 2015, for each of the states bound by the fiscal provisions (Title III).

Until the MTO has been achieved, all states are obliged to adhere to an adjustment path towards this country-specific target, where the structural balance must improve at least 0.5% points per year.

Beside existence of the debt dependent minimum limits for the MTO dictated by the Fiscal Compact, there is also existence of two other calculated minimum limits for the MTO determined by a formula ensuring respectively "a safety margin to respect the nominal 3%-limit during economic downturns" and "long-term sustainability of public finances taking into account the forecast for future adverse aging related costs".

[50] Green rows in the table reflect full compliance with the Fiscal Compact criteria, requiring the state to have achieved its MTO for the entire 2015–17 period.

Yellow rows represent compliance with only the Stability and Growth Pact (SGP), as the state is still on an adjustment path to respect its MTO at a midterm horizon.

The noted ongoing EDPs will be abrogated, as soon as the concerned state for the period encompassing the last completed fiscal year (based on final notified data) and for the current and next year (based on forecast data), succeeds in delivering a general government account in full compliance with the SGP's deficit criteria (budget deficit no more than 3.0% of GDP) and the debt criterion (debt‑to‑GDP ratio below 60% – or sufficiently declining towards this level).

As part of the increased surveillance efforts introduced by the Sixpack, all EDP's are now evaluated three times per year, based upon data from the commission's economic outlook reports published in February, May and November.

[52] As Germany and Malta both had their 2011‑EDP abrogated in 2012, these two states will need to comply with the "debt brake benchmark rule" starting from Fiscal Year 2014, with their first official debt-reduction evaluation expected to be published shortly after the year has ended – and at the latest when the Commission publish its assessment of the next Stability Programmes of the member states in May 2015.