Unemployment and Fiscal Policy in the European Union

This Policy Brief discusses the need for a more expansionary approach to fiscal policy to combat the persistently high levels of unemployment in many parts of the EU. This will require amendment to the Stability and Growth Pact. Harmonisation of taxes will limit individual countries’ room to manoeuvre, but provide opportunities to make tax changes on a European scale. Any attempt to conduct fiscal policy on such a scale raises the question of a European Budget and the issues considered in the 1977 MacDougall Report.This in turn raises constitutional issues about the most effective way of taking budgetary and fiscal policy decisions at a European level.

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