Ensuring price stability, as well as confidence in the euro, is the best contribution to higher and sustainable growth the ECB can make because it also allows for the advantage of low medium and long term market rates which in many European countries are still more important for the financing of investments by enterprises, households and government.
In the fiscal sphere, almost all the governments in the euro zone allowed the automatic stabilisers to take full effect during the recent slowdown, and that effect was often reinforced by discretionary measures. Between 2000 and 2003, the budgetary deficit of general government in the euro area has grown from 0.9 p.c. of GDP to 2.7 p.c.