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.

Special report no 18/2018: Is the main objective of the preventive arm of the Stability and Growth Pact delivered?