But many of us underestimated the technological advances also taking place in the extraction of fossil fuels, such as shale gas and deep water drilling. As regards financing, climate-friendly investments would have been more attractive in a world of appropriate pricing and regulation of carbon.
The Pact acts as an anchor for confidence, and the existing flexibility within the rules allows the budgetary costs of major structural reforms to be addressed and demand to be supported. There is also leeway to achieve a more growth-friendly composition of fiscal policies.