Is the main objective of the preventive arm of the Stability and Growth Pact delivered?

Author (Corporate)
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Series Details Number 18
Publication Date 12/07/2018
ISBN 978-92-847-0271-8
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The European Commission has exercised discretionary powers granted by the preventive arm regulation very extensively with a view to reduce the adjustment requirements, both by setting the implementation rules and in individual decisions.

We consider that the combination of the current matrix parameters, allowed deviations and flexibility clauses cumulatively erode the target set in the Regulation which is to achieve an average annual adjustment of 0.5 % of GDP over the cycle. This prevents that the Medium Term Objectives of member states are reached within a reasonable period. Particularly worrisome is very slow, or even absent adjustment in several member states with high public debt ratio.

The implementation rules and Commission’s practice therefore need to be reviewed and strengthened.

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ECA News, 12.07.18: Preventive arm of Stability and Growth pact: the Commission has not ensured that the regulation’s main objective is met

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