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Author: Nicolas Carnot
Large and differentiated fiscal adjustments underway in EU countries require credible strategies, including a growth-friendly approach to consolidation design. This brief captures in a summary fashion the main underlying principles for fiscal adjustments of high quality. While setting some general markers, it acknowledges the complexity of this debate, which blends macro-economic and micro-economic considerations, country-specific features, and a dimension of political choice in consolidation strategies.
The brief concludes that while some emphasis on expenditure restraint is generally part of well-designed consolidations, one should pick up growth-friendly measures in a comprehensive approach on both the spending and revenues sides. Fiscal adjustment offers an opportunity to improve the quality of public spending as well as the structure of the tax system.