Change of course required on the road to Maastricht

Conclusion

Calculations by the DIW show that most countries should no longer have great difficulty in meeting the monetary criteria for participation. In this respect considerable success has been achieved in Europe. The calculations show, however, that meeting the fiscal policy criteria within the time allowed constitutes an insuperable barrier for some countries. Moreover, if a tough austerity policy is pursued throughout Europe, serious growth losses are likely, which would further exacerbate the already unsatisfactory labour market situation in the EU countries. Such an approach would probably endanger the entire project. It would therefore be better to apply a less stringent interpretation of the fiscal criteria — one which takes account of cyclical trends — and thus to adopt a moderately restrictive fiscal policy course. It is of central importance that such a course is accompanied by a monetary policy that, through lower interest rates, stimulates investment activity. It is only by means of such a combined strategy that the demand shortfall resulting from the — necessary — consolidation of government budgets can be offset, and it is only then that the deficits will slowly narrow without this posing a danger to macroeconomic stability.