Although strictures against excessive fiscal deficits and debts were built into the Maastricht Treaty, the European Union (EU) has had relatively weak mechanisms to enforce them, as EU officials themselves have recently acknowledged. Little provision was made for fiscal transfers across members of the euro area in the event that financial support for members became necessary.
The global financial crisis created an environment in which the presumed EU guarantee was more likely to be tested, as stimulus measures and lost revenue led to sizable fiscal deficits and the rapid accumulation of debt across euro-area members. Nowhere were these problems with the EU’s fiscal framework more evident than in Greece.