Is the European Stability and Growth Pact in need of reform? Should it even be abandoned? The recent communication of the European Commission, tabled by Pedro Solbes, the Commissioner for monetary affairs, for consideration by the EU fi nance ministers takes up some of the critique raised in the past months’ public debate while staying firm on the essence. The essence is: fi rst, EU members must obey the limit for the public sector defi cit of three per cent of GDP, except for the cases of a “severe economic downturn” or an “unusual event” outside the country’s control; second, over the medium term they are committed to realising a budgetary position of “close to balance or in surplus” or, to put it differently, their structural defi cit should (always) be zero.
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