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Overview of the EU Economic Governance Rules
The key elements of the EU economic governance framework applicable to most (but not
all) EU countries, following the reforms of 2011-13, can be summarised as follows:
Countries must manage their public finances within fixed limits
The debt level and the deficit level must not exceed ceilings of 60% of GDP and 3% of GDP
respectively; both expressed in general government terms.
The public finances should be maintained close to a balanced position (i.e. a deficit of no
more than 0.5% of GDP) in cyclically-adjusted terms, net of one-off factors.
The growth in public expenditure must not exceed the underlying medium-term level of
economic growth, unless it is financed by additional revenues.
If these limits are not respected, budgetary correction must proceed at a minimum pace
Any unduly high non-structural budget deficit (i.e. not close-to-balance) must be
corrected by 0.5% of GDP each year, in structural terms; while any excess above the debt
limit of 60% of GDP must be reduced by 1/20th each year. 
Exceptions to these rules are very limited
Countries may deviate from, and delay compliance with, these fiscal limits in the event
of a sudden severe economic shock, provided that they are making satisfactory fiscal effort
in structural terms.
The fiscal limits must be enshrined in national constitutions or laws
Numerical fiscal rules, consistent with the above targets, should be adopted in national
laws or constitutions.
There are financial penalties for non-compliance
Sustained failure to comply with the fiscal commitments leads to an escalating process
of “recommendations” and sanctions, culminating in financial penalties.
Under new voting rules, it is harder for member states to block decisions on these matters
Co-ordination of national budgetary calendars
As well as preparing medium-term Stability or Convergence Programmes in April of each
year, countries should submit a draft annual budget in October of each year for
consideration at EU level prior to being adopted at the national level by year-end.