The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union: Political issues

In December 2011 European Union Heads of State or Government, with the exception of the UK, agreed to adopt a 'Fiscal Compact' as part of an overall strategy to tackle the sovereign debt crisis in the Euro area. The UK vetoed its adoption as an EU treaty, so the other Member States agreed to adopt it as an international treaty instead. On 30 January 2012, 25 Member States formally agreed the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (TSCG) and signed it in March 2012. The UK and the Czech Republic are not parties to the new Treaty, which can enter into force with 12 ratifications.

This paper looks at the background to the TSCG, the reasons for the UK’s non-participation and some of the issues it raises, such as its effectiveness, its relationship with the EU Treaties and EU law, the use of the EU institutions in a non-EU treaty, and whether it could give rise to a ‘two-speed’ Europe and further UK isolation in the EU.