Press Release: Public Finances in 2006: new Stability and Growth Pact gets off to a good start but key tests ahead

The European Commission on 13 June 2006 adopted a Communication to Parliament and Council, which gave an analysis of the first year of application of the reformed Stability and Growth Pact (SGP). The document built on the Annual report on the state of public finances in the European Union and the Commissions conclusions were positive overall but it identified more key tests still to come. While it was said that the new Pact had resulted in more national ownership of the budgetary discipline rules and better consolidation efforts in Member States, it was noted that the ‘preventive arm’ of the Pact, i.e. the attainment of sound budgetary balances in the medium-term, could give rise to concern.