Macroeconomic Effects of the Policy of Budget Consolidation in the EU

Future budget consolidation measures – within the framework of the "Stability Pact" – may result in a more significant slow-down of economic growth than that experienced during the 1995-1997 period. One-time effects and outsourcing measures are limited in scope, further interest-rate effects are not to be expected, least of all in the former soft-currency countries, devaluation has become impossible within the Monetary Union, and the savings ratio is expected to stabilise on a medium-term basis. Hence, an anti-cyclical budget policy is called for from the macroeconomic point of view.