Press Release: Preventive arm of the Stability and Growth Pact needs to be made more effective

As the number of countries running excessive budgetary deficits diminishes, it is of the utmost importance that national governments in the European Union take advantage of the good economic times to progress rapidly towards the objective of sound and sustainable budgetary positions. Under current policies, only 10 of the 27 EU countries will have reached their medium-term budgetary objective (MTO) in 2008 despite three consecutive years of above-trend economic growth. To improve the functioning of the 'preventive arm' of the Stability and Growth Pact (SGP), therefore, the Commission has made a number of proposals which build on the 2005 SGP reform. They deal with the way governments formulate and implement their budgetary strategies over the medium term and the strengthening of surveillance and coordination of economic and budgetary policies at EU level. The aim is to achieve sustainable budgetary policies that contribute to higher growth and employment.