What price the euro? Summary

The analysis shows that, due to the specific macroeconomic conditions and transformational character of the new CEE member states, the nominal criteria of the Stability and Growth Pact are, when applied to these countries, more stringent than for the present euro-zone members.

What is more, on account of the new member states' higher social risks and less developed economic activity, these criteria are also highly inappropriate. Indeed, they will unnecessarily constrain the higher public investment, levels of welfare spending and employment growth that are so badly needed by these countries if they are to catch up with the rest of the EU.

As such, the imposition of the Stability and Growth Pact criteria on the new member states will prevent them from achieving the objectives of the Lisbon strategy and developing in accordance with the principles of the European Social Model.