Hinajeros on the Euro Area Crisis

The Euro Area Crisis and Constitutional Limits to Fiscal Integration

Alicia Hinarejos 

University of Cambridge - Faculty of Law
June 1, 2012

Cambridge Yearbook of European Legal Studies, 2012
University of Cambridge Faculty of Law Research Paper 
Abstract:      
Against the backdrop of the current euro area crisis and the imbalance at the heart of the Economic and Monetary Union, this paper will explore the current state of fiscal integration, as well as its likely future and limits. It will do so by, first, creating a ‘map to fiscal integration’ that takes into account the degree of legalisation of state cooperation, as well as the subject-matter of particular fiscal rules. The three measures or packs of measures adopted by the euro countries since the start of the crisis will be discussed and located within this map to fiscal integration. The paper will show that a distinction can be drawn between (1) what will be referred to here as ‘balance rules,’ or rules that concern budgetary discipline and balance, and (2) substantive rules or measures that concern the allocation of resources within a state and thus have a distributive or redistributive effect. Once the state of play of fiscal integration is clear, the paper will turn to the shape of future integration in this area, arguing that further fiscal integration — or legal integration that goes beyond balance rules and crosses into the (re)distributive area — is severely limited by the current Treaties and that, moreover, even a hypothetical Treaty amendment with a view to creating a full EU fiscal policy of this kind would run into significant theoretical problems, both as a matter of EU law and of national constitutional law.

Number of Pages in PDF File: 31

Keywords: European Union, European integration, EU law, constitutional law of the EU, Economic and Monetary Union, EMU, euro area crisis, eurozone crisis, fiscal policy, fiscal integration, fiscal union, banking union

Full text available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2146141