The quantitative budget ceilings were suited to ensuring that high debt ratios fall swiftly. However, they were insufficiently binding and their application was often the result of political negotiations. The results were not convincing either. Highly indebted countries failed to reduce their debt levels even in good economic times. Currently the rules are still suspended until the end of the year.
There are, at least, two good reasons for this: they would enhance the flexibility and resilience of euro area economies in times when a smoother shock absorption capacity might probably be badly needed. And, of course, these reforms are urgently needed to improve the dismal potential growth performance in the euro area in general – and in Germany in particular.