The European fiscal compact which calls for EU countries to stay within the Maastricht treaty government deficit hurdle of 3% of GDP has already been signed off on by all 27 EU governments except the United Kingdom and the Czech Republic. This agreement calls for countries that fail to meet their deficit targets to lose some national sovereignty on budgeting issues and accede to EU oversight.
However, to formally ratify the fiscal compact, Germany needs a two-thirds majority of the Bundestag and Bundesrat to sign on. This is where the domestic problem for Angela Merkel lies. As her party has lost representation in the Bundesrat due to poor performances in state elections, Merkel must agree to compromises with the SPD and Green/Buendnis 90 parties as well as with her CSU and FDP coaliti...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.