Evolution of Public Finance of the European Union Countries Since 2007 – Limited Effectiveness of Disciplinary Mechanisms

Abstract

The state of public finance in most countries of the Euro zone and the
remaining European Union countries has deteriorated considerably since
2008. It turned out that the existing mechanisms intended to have disciplinary
effects on budgetary policy were insufficient to be able to prevent the
creation of excessive budget deficits and a fast increase in public debt.
Some of the European Union countries found themselves in a particularly difficult
situation. Without the financial support provided by other Member States,
Greece or Ireland would not have beeen able to refinance their public debt.
Budget problems of those and some other countries belonging to the Euro
zone have been resolved for the time being, however, the threat that they may
exacerbate in the future still exists. There is an urgent need for the increase
in the effectiveness of excessive deficit procedure. The state of Polish public
finance has also deteriorated substantially in recent years. This limits the
possibilities of Poland to join the Euro zone in the foreseeable future.