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<p>The UK is not a signatory of the Treaty on Stability, Coordination and Governance
in the Economic and Monetary Union, which is also known as the ‘Fiscal Compact.’ The
signatories of the Fiscal Compact have committed to incorporate it into the main EU
treaties, within five years of it entering into force. However, it would be premature
to speculate on the conclusions of future treaty change negotiations in respect of
the Fiscal Compact, which will require unanimous agreement amongst all other Member
States, including the UK.</p><p>However, the UK does participate in the EU’s Stability
and Growth Pact, which sets rules on Member States’ debt and deficits, although, unlike
other Member States the UK cannot face any sanction under this process.</p><p>The
updated Charter for Budget Responsibility, which sets out the government’s fiscal
and debt management objectives and the fiscal mandate, states the government must
explain in each Budget Report how all significant fiscal policy measures introduced
by the government since the last Budget maintain the path of the public finances in
a position consistent with the government’s European commitments.</p>
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