Knowledge Centre Archive


The European Union’s ‘Fiscal Compact’—More of the Same

By SEI Investment Management Unit

While the latest European Union (EU) framework for addressing the European Monetary Union’s (EMU or eurozone) government debt crisis should buy more time, it does not solve the underlying problems.

As a condition of the agreement, signatories agreed to consolidated oversight of national governments’ finances. But additional fiscal austerity in the near-term could exacerbate what appears to be a nascent recession in the eurozone.

The summit exposed some interesting political rifts, but we believe that current speculation on the euro’s inevitable demise is overdone.

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