Compliance Map: What the Data Really Says About EU Fiscal Rule Compliance
- Kodex AI
- Jul 15
- 3 min read
Imagine your personal budget looks flawless on paper — everything neatly planned and aligned. And then small oversights you thought didn’t matter start to snowball, leading you astray from your financial goals.
Now scale that scenario up to an entire country. Multiply your budget by billions. That’s the reality the European Union has faced in managing its fiscal rules — a system designed to maintain discipline, stability, and fairness across a deeply interconnected economic area.
But do countries actually follow the rules?
A New Lens on an Old Question
A new and uniquely powerful dataset, compiled by the Secretariat of the European Fiscal Board, offers answers. It pulls back the curtain on over two decades of EU member states' fiscal behavior. The data is unfiltered, removing legal and political interpretation, offering a rare, purely quantitative view of compliance.
The findings are striking.
The Rules of the Game
To understand compliance, we must first understand the rules. Since the late 1990s, the EU’s Stability and Growth Pact (SGP) has laid out four main fiscal benchmarks:
Deficit Rule – Budget deficits should stay below 3% of GDP.
Debt Rule – Public debt should remain below 60% of GDP, or be declining steadily toward it.
Structural Balance Rule – Fiscal balance adjusted for economic cycles must meet medium-term targets.
Expenditure Rule – Public spending growth must not exceed long-term economic growth potential.
These rules aim to promote long-term financial sustainability while minimizing the risk of one country’s fiscal policy destabilizing the wider euro area.
So, Are Member States Following the Rules?
According to the new database, compliance stands just above 50% across all countries and rules. In other words, EU nations have followed their own fiscal rules only about half the time since 1998.
This average hides significant variation. Countries like Sweden, Finland, Estonia, and Ireland exhibit compliance rates above 66%, while others such as France, Italy, Greece, and Portugal fall below 33%. Unsurprisingly, high debt levels and low compliance go hand in hand—countries with debt above 90% of GDP show compliance rates of just 33%, compared to 67% for those below the 60% threshold.
A Dangerous Illusion of Stability
Perhaps the most sobering insight is the cyclical trap embedded in the rules. Compliance with headline indicators (deficit and debt) tends to improve during economic booms and collapse during downturns—not because of better policy, but due to favorable economic winds.
In 2007, before the global financial crisis, and again before the COVID-19 pandemic, over 80% of EU countries appeared fiscally sound on paper. Yet the more meaningful indicators—structural balance and expenditure discipline—showed poor compliance. This false sense of security meant that crucial buffers weren’t built when times were good, leaving governments more vulnerable when crises hit.
Governance Makes a Difference
The data makes a strong case for the role of governance and institutional quality. Countries with long-standing, independent fiscal watchdogs—institutions established before 2011—show 20 percentage points higher compliance. Strong national rules and effective public institutions (with high scores in regulatory quality, control of corruption, and government effectiveness) consistently correlate with better fiscal discipline.
Lessons for the Future
The numbers are clear: compliance is inconsistent, headline indicators can mislead, and institutional quality matters more than ever.
But the bigger question looms—how can the EU rethink its fiscal frameworks to avoid short-term complacency and encourage genuine long-term stability?
Incentivizing structural discipline, strengthening fiscal institutions, and adjusting rules to reduce procyclicality may be key steps. As this new dataset shows, the story of fiscal compliance in the EU is far more nuanced—and more urgent—than a simple percentage target.
