Should the euro zone’s fiscal rules be relaxed?

Italy’s coalition government wants to be able to conduct a more expansionary fiscal policy (officially a fiscal deficit of 2.4% of GDP in 2019, when in reality it will be close to 3% of GDP, while 0.8% was forecast). It will be very hard and painful for France to get its fiscal deficit down from 2.8% of GDP in 2019 to 0.5% in 2022 ( a commit ment it has made ). Meanwhile, for the euro zone as a whole excluding Germany , the structural fiscal deficit (adjusted for the economic cycle) has risen again since 2017. This raises an important question: should the euro zone’s fiscal rules be relaxed and the countries be allowed to run higher fiscal deficits? We weigh up the arguments for and against relaxing the fiscal rules.