The decision taken by the ECOFIN Council in November 2003 not to act on the Commission’s recommendations regarding excessive deficit procedures against France and Germany may have sown the seeds for such non-aggression pact between countries in the budgetary surveillance procedure. It may also have weakened the surveillance mission of the Commission, thus undermining the political basis of the monetary union.
It costs a bit more, but that is in the context of a fully employed economy struggling to meet demand. The key banking institutions are strongly capitalised, have adequate liquidity and relatively little exposure to the problems in the US housing market. Business and consumer confidence both remain high.