Varieties of Fiscal Councils in the Euro Area: How Have Domestic Political Economy Considerations Influenced Their Design?

The amount of national fiscal councils has rapidly increased in the eurozone since the global financial crisis. Low compliance with fiscal rules and a lack of national ownership acted as the catalyst for their spreading. The fiscal compact and the two-pack regulation obliges every euro area member state to create a fiscal council. However, the European legal requirements have left enough wiggle room to create fiscal councils with heterogeneous mandates and institutional features. Some ‘bottom-up’ fiscal councils like the Dutch Bureau for Economic Policy Analysis are socially embedded in the electorate’s preference for fiscal discipline. Other fiscal councils have been set up purely as a response to the troika’s conditionality. They lack democratic legitimacy and are therefore perceived as a ‘domestic troika’. This article shows how different governments have made strategic use of the newly created fiscal councils to help them solve policy challenges at home. Second, the article shows how these strategic considerations have influenced the institutional design features of various fiscal councils in the euro area and how the Commission further supports national capacity-building.