The general government deficit amounted to € bn in 2003. Around 42½% of this deficit was attributable to the regional and local level. It is crucial to reduce the general government deficits, not least on account of Germany’s international commitments. In the run-up to European monetary union, Germany was the most vociferous advocate of a stability and growth pact.
The adoption of the Stability and Growth Pact formed one of the cornerstones of a successful European monetary union. BIS Review 62/2004  5  The objective of the Stability and Growth Pact is to attain and maintain sound public finances in the euro area. In no way does the pact constitute an excessive constraint on the flexibility of member states’ fiscal policy.