Most euro area countries have benefited from significantly better financing conditions than in the 1990s, a situation which has supported fiscal consolidation. 2 For instance, in the run-up to Stage Three of EMU, fiscal deficits were considerably reduced, mainly due to falling interest payments, from an average of 5.2% of GDP between 1990 and 1998 to 3.4% between 1999 and 2007.
In this regard, one can point to such positive effects as providing firms and consumers with imported raw materials, products, and commercial goods at lower prices, as well as facilitating domestic firms’ equity investment and acquisitions of overseas firms and projects, thereby raising the domestic firms’ productivity.