The paper investigates the factors that led the Italian government to accede to the Fiscal Compact in spite of its demanding requirements for the country’s budgetary policy. Specifically, the paper assesses the extent to which Italian government’s support for the Fiscal Compact was driven by the logic of the ‘vincolo esterno’ in a replication of the pattern that led Italy to sign the Maastricht Treaty. The paper finds only limited support to the ‘vincolo esterno’ argument. Rather than being motivated by domestic dysfunctions or socialization to the fiscal discipline doctrine, the Italian government acted mainly out of market punishment fears. Interestingly, however, three factors filtered such external pressures and contributed shaping government’s support for the new Treaty. First, the Economic and Monetary Union unfinished architecture, and in particular the lack of a European financial firewall, weakened opposition to the new Treaty. That is to say, the institutional context constrained the choices that Italian policymakers could pursue. Second, the pro-European orientations of government members contributed to elevating the new Treaty to a symbol of European integration. Finally, the Italian government confronted a quite large domestic win-set during the negotiations, as the parties supporting the Monti government also supported Italy’s participation to the new Treaty.

Public debt: relevance for funding of modern states – Keynesian revolution – Consequences of the financial crisis in Germany – Introduction of the debt brake and Fiscal Compact – The constitutional debt brake: structure and exceptions of the balanced budget rule, four deficiencies of the debt brake – The Fiscal Compact: historical background and structure of the balanced budget rule – Sufficient implementation of the balanced budget rule in Germany? – Constitutionality of the Fiscal Compact? – Austerity as the wrong answer for solving the current economic problems

In between the writing of this editorial and the publication of this issue of EuConst, the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, in everyday parlance the ‘Fiscal Compact’, will have been signed by the representatives of the governments of the contracting parties — the member states of the European Union minus the United Kingdom and the Czech Republic. The Fiscal Compact is intended to foster budgetary discipline, to strengthen the coordination of economic policies and to improve the governance of the euro area.