Several fiscal rules have been imposed in recent decades, partly to make sure future generations do not have to deal with the consequences of potentially irresponsible policies of today. One of these rules is an expenditure rule that increased in popularity in Europe until 2011, when EU made it a legal obligation to apply an expenditure rule. This study examines the impact of expenditure rules on fiscal sustainability in terms of public debt and budget deficits, as well as the impact of expenditure rules on environmental sustainability in terms of environmental expenditure and taxation. The study uses a panel data set that includes observations that range from 1985 to 2015 for all EU member countries as of 2015. A benchmark model specification which applies fixed effects regression and that includes several control variables is estimated. The study then proceeds to investigate the effect from the financial crisis before some political fragmentation variables are tested as instruments in Two Stage Least Squares estimations. Expenditure rules are found to minimize budget deficits. No other explainable and significant results are found.