Are the new rules on fiscal governance flexible enough? This is the question that seems to be on the lips of most financial experts, in reaction to the European Commission’s new ‘tough rules’ for those who violate the terms set out in relation to good governance.

In reality, nothing has changed in terms of criteria definitions. The 1995 Maastricht Treaty is still in effect and this stipulates that for sustainable development, one can run up a deficit of three per cent. In addition, the treaty stipulates that public debt must be under 60 per cent of a country’s GDP.

These criteria have not been changed. It is the corrective mechanisms which have changed. Put very simply, the punishment one gets if a country does not stick to the criteria.

But while the new corrective measures are punitive, in terms of deposits and fines if a country does not move to rectify a problem with its economy, one has to wonder whether the EU will ever recognise the fact that no European economy is identical.

Let us take Germany as an example. Germany has a surplus in trade at this given moment and is busy exporting its products to other EU nations as well as external neighbours. Given the current figures of economic growth and a surplus, this would be a good time to push its deficit up in order to create more growth.

If the new penalties are to work, they must be implemented regimentally. We can never go back to the days where countries, such as Italy, joined the eurozone with a massive 120 per cent of GDP public debt.

Spain, Greece, Portugal and Ireland, amongst others, swelled their deficits to double figures and even France and Germany – two powerhouses – breached the treaty with impunity in terms of deficit management.

This, all the while, took place when small countries like Malta were threatened with excessive deficit procedures on more than one occasion for modest infractions involving one percentage point. To coin Orwell’s term, we cannot have a situation where some animals are more equal than others – what is good for the goose is good for the gander and it is imperative and of the utmost importance that the European Commission makes itself clear on this fact.

If these measures are put into effect, then they have to be put into effect across the board, and this is where analysts fear that the system is too rigid. The Commission cannot afford to give any leeway on the matter or they will be accused of favouritism, but it is equally clear that economies move in cycles and that different countries face different realities at any given time. The crux of the matter is that there is far too wide a gap between the top economies in the eurozone and the smaller ones at the bottom.

It was also sad the note that the Commission did not take up ECB President Jean Claude Trichet’s suggestion to include a ‘sin-bin’ system. This would involve EU member states being stripped of voting rights on policy decisions until that government takes action to rectify the problem. This would have surely yielded better results. A fine is a fine, granted, but suspending someone from the decision-making process would surely have been much more of a deterrent. Will it prevent a future crisis? Of course not. Economies move in cycles. The free market relies on confidence – it will only be a matter of time before the world gets over-confident, then arrogant, once again.