The ECOFIN Council decision of November 2003 that noted the existence of
‘excessive deficits’ in France and Germany but did not impose
sanctions on these two governments was widely interpreted as sounding the
death-knell for the Stability and Growth Pact. A ruling by the European Court of
Justice on 13 July 2004 annulled this decision, paving the way for reform of fiscal
policy coordination in the Euro Area. This article examines what caused the
difficulties that have arisen, reviews and appraises a range of proposals for reform
of EMU’s fiscal policy rules and suggests a way forward.
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