Eurozone Dystopia

Eurozone Dystopia

Groupthink and Denial on a Grand Scale

William Mitchell

Eurozone Dystopia traces the origin of the Eurozone and shows how the historical Franco-German rivalry combined with the growing dominance of neo-liberal economic thinking to create a monetary system that was deeply flawed and destined to fail. It argues that the political class in Europe is trapped in a destructive groupthink which prevents it from seeing their own policy failures. Millions are unemployed as a result and the member states are caught in a cycle of persistent stagnation and rising social instability.

Chapter 11: The Stability and Growth Pact (SGP)

William Mitchell

Subjects: economics and finance, political economy, post-keynesian economics, politics and public policy, european politics and policy, political economy


The SGP was formally adopted in 1997. A Memorandum circulated in November 1995 by the German Finance Minister, Theo Waigel, motivated its final form (Waigel, 1995). Waigel proposed a ‘Stability Pact’ to restrict government fiscal policy discretion. The Maastricht Treaty had left the fiscal side of the EMU up in the air. The Treaty included articles relating to the coordination and monitoring of Member State budgets and the ‘excessive deficit procedure’ but suggested that the detail, which was outlined in the Protocol attached to Article 104, would require further legislation and incorporation into the Treaty. The scene was set for further negotiations. The final SGP essentially amended Articles 121 and 126 of the Treaty on the Functioning of the European Union (Treaty of Rome) with reference values specified in the Protocol on the excessive deficit procedure, which is one of the annexes that applies to both the Treaty on European Union (originally agreed in Maastricht) and the Treaty on the Functioning of the European Union, the overarching document that defined the EEC in 1958.

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