BERLIN (Reuters) - The fiscal splintering of the euro zone has increased pressure on the bloc to toughen its rules on public finances, and economists say a failure to make changes could expose it to more speculative attacks in the months and years to come.

The European Union’s Stability and Growth Pact, designed to enforce fiscal discipline, sets debt and deficit ceilings for member states and gives Brussels the right to warn, and ultimately sanction countries who violate these limits.

For much of the past decade it has done its job -- keeping the euro area on a single track and, more importantly, convincing markets the bloc could manage the fiscal and economic differences among its members.

The economic crisis has changed all that. Single currency members Greece, Portugal and Spain are under acute pressure because of their swollen deficits, a situation economists say has highlighted the need for new measures to strengthen or even replace the stability pact.

In a research note this weekend, economists at UniCredit described the pact as a “spectacular failure” and urged policymakers to replace it with something “tougher and more enforceable” in order to prevent turbulence in the future.

“Volatility and tensions on euro zone sovereign markets could easily become a constant feature of 2010,” the bank’s chief economist Marco Annunziata wrote.

STRENGTHENING THE PACT

To strengthen the pact, economists say Brussels should have new powers to monitor statistical data from euro zone members.

The European Commission admitted last month that Greece had deliberately misreported deficit data for years. And in October the government in Athens shocked markets by revealing the budget deficit would be twice as large as previous estimates.

Brussels is now closely monitoring how Greece implements its austerity plan, but much of the damage has already been done.

“Brussels needs to be sending officers from Eurostat to individual countries to do proper checks,” said Juergen Michels, an economist at Citigroup. “If you have rules you need a referee -- at the moment we don’t have that.”

In addition to a better monitoring mechanism, economists say the crisis has also exposed the need for member states to move beyond the rules contained in the pact and coordinate their economic policies more closely.

But this is likely to meet resistance from countries like Germany, who fear a loss of sovereignty over economic policy and suspect some member states could exploit such a forum to try to influence the European Central Bank (ECB).

Chancellor Angela Merkel has made it clear that she blames the fragmentation of the euro-zone economy not on the inadequacies of the stability pact itself, but on the failure of certain member states to respect it.

Berlin fears that establishing new economic rules for the euro zone would be akin to opening Pandora’s Box.

Critics say Germany’s economic policy model, based on wage moderation, high private savings and export-driven growth, itself has weakened domestic demand and helped create the very imbalances the euro zone is now struggling to cope with.

“Right now there is nothing to force adjustment on Germany, whose surpluses are the flipside of the Greek deficits,” said Simon Tilford, chief economist at the Center for European Reform.

“I’m not sure we will see the changes that would prevent future crises. Countries with big trade surpluses first need to realize they are part of their problem.”

LISBON FATIGUE

Jacob von Weizsaecker, a research fellow at the Brussels-based think tank Bruegel, believes opposition to greater economic coordination might not be so high were it not for the EU’s struggles with the Lisbon Treaty.

Merkel herself led the drive to pare down the bloc’s ill-fated “constitution” into a less-ambitious document that was acceptable to all members, only to see it rejected by Irish voters and savaged by euro-skeptics at home and abroad before finally stumbling into force late last year.

The memory of the years-long struggle to push through Lisbon, and the damaging divisions it exposed within the broader EU, still haunt leaders in Berlin and Europe’s other capitals.

“If it hadn’t been for the painful process of the Lisbon Treaty, I think people would be much more adventurous,” Weizsaecker said. “There is a reluctance in Germany and elsewhere to engage in more institution building.”

Still, economists say the risk of ignoring the need for new rules is significant -- not just for fiscally challenged euro countries like Greece and Portugal, but for Germany and the currency bloc as a whole.

Some believe the market pressures seen over the past weeks, in which yield spreads between German bonds and those of weaker bloc members have shot to records, could be just a foretaste of those the bloc will face in the coming year if it fails to act.

“The market appears to be taking over from the European Commission the role of enforcer of fiscal discipline, and it could prove far more efficient and brutal than the Stability and Growth Pact,” said Unicredit’s Annunziata.