Fiscal Capacity and Automatic Stabilizers in the European Monetary Union

Since the financial and euro crises, the EU has worked continuously to improve the stability of the Economic and Monetary Union. The fiscal capacity and automatic stabilisers in the EMU are about addressing and adapting to asymmetric shocks in the Monetary Union and Single Market.The opinion emphasises that despite the improvements in EMU governance and the financial sector, the mere coordination of national fiscal policies has not enhanced the national capacity to absorb economic shocks - nor prevented the emergence of an investment gap. Moreover, the existing policies have proved insufficient to trigger growth-enhancing, sustainable and socially balanced structural reforms. Local and regional authorities should be more involved in the EMU governance as they are often responsible for the implementation policies to asymmetric economic shocks.