This should be facilitated by the decline in consumer price inflation which is expected to occur over the coming months. However, the increase in some labour cost indicators in 2000 warrants close scrutiny. A second important factor will be fiscal policy in the euro area. The relaxation of consolidation efforts at this juncture will lead to an undesirable pro-cyclical impact.
In order not to threaten the progress in fiscal consolidation, the reduction in the tax burden has to be accompanied by a structural reduction of expenditure.