I originally made this page in 2018, to collect my notes on the single market and the stability and growth pact. The pandemic blew the EU of course on this with most of the economies of the EU missing their macro economic goals; the Stability & Growth Pact commits its signatories to keeping to an annual public finance deficit of 3%  of GDP and a public debt to GDP ratio of 60%. This may have impacted an incoming Labour Government as it did governments of all three colours from 2008 to 2017. In the spring of 2023, it became a live issue within the EU, the vast majority of its economy now being in the Eurozone.

SGP Reform 2023

This is all kicked off by the Commissions proposals for reform, which leave the targets unchanged, although there may be a softening of the corrective mechanisms but IMO it needs an electron microscope to detect this. It may include investment targets and seperate national plans. This was all brought to my attention by this article in the FT by Christian Lindner, the German Federal Finance Minister, a member of the FDP shows little has been learned over the last sixty years. I posted on my social media sites,

This is a polemic for QMT, made by the German Finance Minster (FDP) and its entrenchment in law, in this case, Law that the legislature that gives him a mandate can’t change. Fiscal and Monetary policy should be the outcome of a democratic mandate, not embedded in a 30 year old treaty. I say in friendship, Germany needs to learn some macro-economics beyond prudence.

Which in German, reads something like this,

Dies ist eine Polemik gegen die Quantitative Geldtheorie in einem Artikel des deutschen Finanzministers Christian Lindner (FDP) und ihre Verankerung im Gesetz. In diesem Fall ein Gesetz, das die Legislative, die ihm ein Mandat erteilt hat, nicht ändern kann. Die Finanz- und Währungspolitik sollte das Ergebnis eines demokratischen Mandats sein und nicht in einem 30 Jahre alten Vertrag verankert sein. Ich sage in Freundschaft, Deutschland muss Makroökonomie jenseits von Vorsicht lernen.

Übersetzung via deepl

Euractiv reports on Renew Europe’s position, and the Commission’s attempts to broker a deal between /the German’s and the French. The Greens/EFA have also made a statement , which seems closer to my position that the German Government; the European Left also made a statement, criticising the current goals, and point at EU debt rules: austerity in disguise, End of the road for the EU’s Stability and Growth Pact? (pdf 2,4MB) and 30 years of the Single Market: Can I kick it? I also found the S&D statement, which is uncompromisingly pro-people but less pointed on targets and governance.

See also the The European Semester explained


Would the EU treaties have inhibited a Labour Government? Much of the debate focused on industrial policy. Could a Labour Government nationalise an industry? (Yes!) Can it subsidise companies? (Not if this inhibits European companies from entering a market.) Could a Labour Government introduce a minimum wage? (Yes!).  On industrial policy, the New Statesman, now behind a paywall, says,

An analysis of Labour’s 2017 manifesto found that all its policies would be permissible within EU state aid rules, although two of the proposals, a National Investment Bank and regional energy companies, would need to be structured carefully. We can also go further than the 2017 manifesto if we wish. For instance, we could support the growth of co-operatives through the tax system, take ourselves to the top of the league table on investment in skills, put workers on company boards, buy public stakes in private companies in a sovereign wealth fund, and build houses using public bodies – all within single market rules.

Macro-economic Policy

A more interesting question is around Macro-economic policy. Here are my notes on the Stability & Growth Pact (SGP).

On Macro-economic policy, the Stability & Growth Pact commits its signatories to keeping to an annual public finance deficit of 3%  of GDP and a public debt to GDP ratio of 60%. This may impact a Labour Government as it did governments of all three colours from 2008 to 2017.

The Stability & Growth Pact is in fact based on EU Council Regulations and so withdrawal from the EU will mean withdrawal from the Stability & Growth Pact. Wikipedia implies it is an independent treaty. The Stability & Growth Pact has preventative and corrective arms. The preventative arm is a monitoring control and the UK complies with this part of the regime. The preventative arm involves instructions from the Commission and eventually sanctions; the UK is not a party to this regulation. The EU cannot instruct the UK government on Macro-economic policy. The UK was in default of the agreement from 2008 to 2017.

Some links

  1. https://en.wikipedia.org/wiki/European_Fiscal_Compact
  2. Here’s Left Foot Forward  last year (2017)
  3. And here’s the Commission’s page.


I have mirrored the Tarrant & Biondi paper , “EU State Aid Laws and British assumptions: a reality check”, on this site. It is a review of the state of EU Law as it might have applied to Labour’s 2017 election.

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