Some even hold that because the public behave rationally with anticipation of future tax increases or reductions, neither a decrease nor an increase in the budget deficit will have any effect on the economy.
On the labour demand side, there is a need to promote wage flexibility and to address labour market rigidities. Second, also reforms on euro area goods and services markets have a substantial role to play in increasing employment and productivity growth. Policies improving the functioning of product markets include the extension and deepening of the EU internal market.