Answer to Question #199650 in Macroeconomics for Joseph

Question

Why do EU rules limit admissible government deficits and debt levels?

Answer 1

The EU rules since Maastricht Treaty are designed to ensure the  governments run budget deficits less than than 3% of the GDP so as to maintain the public debt not to be more than 60% of the GDP. Based on the EU rules there are no possibilities of the debt levels getting close to EU's 60% limit with no austerity.