Regarding fiscal policies, the Governing Council reiterates the need for rebuilding fiscal buffers. This is particularly important in countries where government debt is high and for which full adherence to the Stability and Growth Pact is critical for safeguarding sound fiscal positions.
Persistently high inflation rates in the UK coupled with a significant depreciation of sterling fed through the exchange rate link to similarly high inflation rates in Ireland. The establishment of the European Monetary System (EMS) – with its primary objective of being a ‘zone of monetary stability’ – offered us the opportunity of importing lower inflation from the more inflation-averse core EU countries.