Even though fiscal policy is normally formulated within a multi-year framework, elements of discretion remain. Any discretion should be used to reduce, rather than increase, cross-country divergences in inflation. Fiscal policy should also be in a sustainable position so that automatic stabilisers can operate fully. At times it may even be appropriate for fiscal policy to seek to offset divergences.
It is certainly the case that there is little to be gained from discretionary pro-cyclical policies. Rather, economic cycles could become more pronounced, resulting in costly adjustment taking place in downturns. The point I made earlier about small countries is relevant here. Euro area monetary policy is not significantly influenced by the inflation rate of a small country.