Differentiated Fiscal Surveillance and the Democratic Promise of Independent Fiscal Institutions in the Economic and Monetary Union

The post-crisis reforms of the Economic and Monetary Union (EMU) have met with skepticism toward their democratic credentials. This certainly applies to the requirement to set up Independent Fiscal Institutions (IFIs). Drawing on Pettit’s model of republican legitimacy, this paper argues however that IFIs can indirectly increase the democratic character of national fiscal policy while preserving Member States’ autonomy. Such a democratic contribution is further facilitated by nationally differentiated implementation of the EU rules regarding the heterogeneous design and powers of IFIs. Based on a comparative analysis of selected Member States’ “elaboration discretion” in defining the organisation and the mandate of IFIs, the article highlights that these features reflect the variety of constitutional settings at domestic level. It is concluded that this heterogeneity amounts to a form of differentiated integration which allows for a better navigation of the trade-off between the persistence of fiscal policy externalities and the reduction in national autonomy.