Fiscal union

Most member states of the EU participate in economic and monetary union (EMU), based on the euro currency, but most decisions about taxes and spending remain at the national level.

Under the SGP, member states report their economic plans to the European Commission and explain how they are to achieve medium-term budgetary objectives.

Finally, the Council of Economic and Finance Ministers decides by qualified majority whether to accept the Commission's recommendation to the member state or to rewrite the text.

Therefore, after the Eurozone crisis, some people in Europe felt the need for a new union with more powerful fiscal influence among member states.

The treaty is designed to implement stricter caps on government spending and borrowing, including automatic sanctions for countries breaking the rules.

[4] With the crisis of the euro area deepening, more and more attention has been put by scholars on completing the fiscal side of the monetary union.

A common currency and standard interest rate are difficult to manage without a fiscal union that provides similar borrowing costs.

By transferring some fiscal responsibilities to the centre, it would offset the decrease of some stabilisation capacity at the country level resulted from active control of national budgets.