WHAT THE NEW EUROPEAN PACT REALLY IMPLIES: FISCAL RULES AND NEW CHALLENGES

A comparative analysis of the first implementation of the new GSP clarifies several issues. The << net expenditure >> indicator has been applied by the Commission in an unnecessarily opaque manner both in terms of composition and dynamics, leaving too much room to unobservable variables and relying too much on long term uncertain estimations. But the Commission's guidelines are not as binding as one could have feared, largely allowing countries to follow their own path in a multi-annual framework. Given the challenges, the new rules are, however, too restrictive for the EU as a whole, excessively constraining even countries with large fiscal space.