To elevate the growth potential and pave the way for sustainable growth, we also need sound fiscal policies and an appropriate improvement in the competitive edge within the euro area, fostered by bold structural reforms. First, in relation to public finances, there is a need for substantial fiscal consolidation in the euro area.
Macroeconomic stability hinges significantly on the sustainability of public finances, which in turn are susceptible to the challenges posed by demographic developments. Compliance with the EU fiscal framework and the strict application of the rules are critical because this contributes to the sustainability of public finances in EMU. With the improvements in economic growth, determined fiscal consolidation is now even more important.