Deteriorating public finances in a number of EU countries increase vulnerability to crises

Abstract

Most of the EU and eurozone countries seem less prepared to a new global crises challenge compared to 2008 if we follow public finance indicators such as public debt and budget deficit. Good years for the economy are not largely used to improve critical economic indicators for the majority of EU economies. Small and medium sized countries appear to demonstrate prudent fiscal policy compared to big counties. The Maastricht criteria for public finance are transformed to entry barrier for the eurozone rather than ongoing monitoring annual tools. It appears that the moral hazard especially for some large eurozone countries that they can rely on direct financing from ECB is undermining willingness to reform public finance.