Common Monetary Policy, Different Fiscal Policy: How Will Europe React to Crises in the Future? An Analysis Looking at Germany, France and Poland as Examples

The Polish Institute of International Affairs is an analytical institution established by an act of Parliament in 1996 to carry out research and provide expertise in international affairs. PISM disseminates information on contemporary international issues and maintains contacts with academic and political centres in Poland and abroad. The Institute runs courses for public servants, maintains a library (open to the public; 165,000 books and journals), organises conferences, and publishes books, periodicals and documents on Polish foreign policy and international matters.

The funding for PISM comes from the budget. The director is appointed by the prime minister for a term of five years, following consultation with the minister of foreign affairs. The minister supervises the Institute and appoints its advisory council, which includes a representative of the President of the Republic of Poland, academics and officials.Summary

The Eurozone’s Stability and Growth Pact constitutes the institutional framework for fiscal policy, forming the basis of a stable currency. Attitudes within the individual countries in the euro area as to what stable finances look like vary considerably, however.
The differences are reinforced through financially divergent economic trends, which bring a fiscal policy reaction to each country’s respective national situation into conflict with the collective stability of the eurozone as a whole. Germany’s economic strength makes growth-oriented fiscal policy less urgent at the present time; yet, in France the stagnating economy is acting as the driver for fiscal stimuli. In Poland, indeed, they act outside the euro regime in this respect yet are still bound by the fiscal regulations.
In an illustrative analysis of France, Poland and Germany, fundamental differences in economic stability are evident. The variation is apparent in both the control over fiscal decision-making (political vs. automated) and the economic and political objectives (economic recovery vs. stable finances).
These differences are not only reflected in political reactions to proposals for greater integration but also in the views held by the public. Even where a general commitment to reform exists, there is still disagreement as to what shape this should take.
A Europe that cannot agree on shared political solutions and regulations is weakened on an international level. The perspective disclosed by the Five Presidents' Report is one that needs to be discussed seriously. Yet this approach, too, must be based on a shared political will so that each Member State will engage with it.