ABSTRACT
This chapter examines how EU fiscal policy affects democratic governance as Brussels and national states respond to the eurozone crisis. The European Summit of June 2012 demonstrated the effects of this democratic push-back. Resources for bailouts have been amassed through the European Stability Mechanism (ESM) and a fiscal discipline pact now goes beyond the eurozone to cover 25 EU members. In addition, the EU negotiated a new fiscal treaty which would reinforce requirements for joint budgetary planning and empower the Union to scrutinize national policies and programmes more comprehensively. The Treaty on Stability, Coordination and Governance (SCG) committed all parties 'to maintain sound and sustainable public finances and to prevent a government deficit becoming excessive', using 'a balanced budget rule and an automatic mechanism to take corrective action'. The SCG is accompanied by the European Stability Mechanism (ESM) to rationalize previous ad hoc financial bailouts.
