The EU's reactivation of its fiscal rules should help stabilize sovereign debt in member states. At the same time, by reinforcing low private investment and consumption, the return to austerity could--as was the case for Greece between 2009 and 2013--worsen the outlook for debt sustainability and hence prove to be self-defeating. This is because the EU, particularly Germany, faces structural challenges to its export-driven growth model and underinvests, compared with the U.S. and China. […]