These automatic stabilisers result in lower tax receipts and higher unemployment-related government expenditure in the event of an economic downturn, thus supporting aggregate demand and income. An appropriate medium-term reference value for the government budget balance also prevents the sustainability of fiscal policies from becoming a problem, a subject on which I will say more in a few moments.
More generally, a rule-based system for fiscal policy provides clear yardsticks against which other policy-makers and the public can measure the current and future course of policies. It sets up a stable and predictable environment, which allows markets to operate more efficiently, and supports longerterm decision-making by the public and by corporations.