UDC 336.02(4-672EU)
Biblid: 0543-3657, 63 (2012)
Vol. 63, No 1148, pp. 80-94

Izvorni naučni rad
Received: 17 Oct 2012
Accepted: 01 Jan 1970


Radičić Dragana (Erste banka A.D., Novi Sad), radicic.dragana@yahoo.com

Sixty years after the inception of the European idea, the European Union is in trouble. The euro area is experiencing a crisis related to sovereign debt in several countries, which has eroded confidence in the European project and severely hit public finances of the single currency area. The crisis has its roots in the build-up of excessive financial, fiscal and economic imbalances in the euro area. Furthermore, the eurozone budgetary discipline was not a great success. A sharp deterioration in the public finances in Europe since the financial crisis erupted, combined with the increasing debt-to-GDP ratio in many eurozone countries, has contributed to the fragility of the public finances. Therefore, the imperative in many countries is to restore sound public finances. In order to safeguard the financial stability of the euro area there is a need to enhance the existing crisis mechanisms and improve economic governance in the euro area as a whole as well as on national levels of some of its member countries. Fiscal integration within Europe is a necessary and fundamental part of the project designed for saving the euro. The key strategy for the European economies should be the right mix of fiscal tightening, growth-oriented policies and deeper integration.

Keywords: Sovereign debt crisis, budget deficit, fiscal policy, financial stability, fiscal integrations, public finances, fiscal rules, sustainable growth