The general answer is that it is too early to judge the implications of the recent reform of the SGP for the sustainability of public finances and for the stabilisation role of fiscal policy in Europe. Ultimately, it is the implementation of the revised rules that will provide the definite answer.
The outlook for fiscal policies in many countries (as reflected in plans and forecasts), the excessive deficit procedure’s loss of some “teeth” and the unchanged incentives for compliance and strict implementation suggest that one should be sceptical. At the same time, governments have unanimously stressed their commitment to sound fiscal policies.