They can let automatic stabilisers operate freely, resulting in the current economic environment in a deterioration of the headline budget balance but not in excessive deficits. The importance of the functioning of automatic stabilisers in the euro area should not be underestimated.
In the euro area, the contribution to economic stabilisation made by these stabilisers is generally higher, on average, than in other industrialised countries due to the high sensitivity of revenues and expenditures to economic fluctuations in Europe. However, we have serious doubts about the efficiency of discretionary fiscal policies. Activist policies may have pro-cyclical effects, given the time-lags involved.