Negotiating in stages: National positions and the reform of the Stability and Growth Pact

This article examines the politics of the 2005 reform of the Stability and Growth Pact (SGP). It distinguishes between two stages in the reform process. The first stage delimited the negotiation space - confining reform into an interpretation of the formal clauses that prescribe SGP functioning - and set the reform agenda. In the second, decision-making stage, Member States engaged in high politics bargaining, more sensitive to their short-term (fiscal deficit) and long-term (fiscal sustainability) macroeconomic conditions, attempting to upload country-specific 'expenditure exceptionalism'. The authors of this article find a crucial disjunction in some Member States between positions held across the two stages. Strategic considerations, comprising the broader constitutional/political game and the need to demonstrate national macroeconomic credibility, account for such discrepancy in the two negotiation stages.