Negotiating implementation of EU fiscal governance

Since 1997 the Economic and Monetary Union has been centred on the Stability and Growth Pact (SGP), which provides the framework for the coordination of economic policies and the surveillance of fiscal policies of member states. The country-specific recommendations, which address the member states' macroeconomic programmes, are the policy instruments of the SGP preventive arm. At the same time, these recommendations are the object of intense negotiation between the Commission and the Council. Why are these recommendations a matter of bargaining between the Commission and the Council? What are the factors that determine the negotiation outcomes? Employing a provision-by-provision text analysis, I show that the Council strengthens almost 50 percent of the country-specific recommendations proposed by the Commission between 1999 and 2015. The Council tightens the recommendations during the financial crisis and against highly indebted countries. Recommendations addressed to large countries are instead less likely to be tightened.