Brussels, 2 December 2005
The Directorate-General for Economic and Financial Affairs (DG ECFIN) of the Commission of the European Union organised this workshop on 2 December 2005 in Brussels. The broad topic of the workshop was budgetary implications of structural reforms.
The workshop aimed at improving our understanding of the short, medium and long-term budgetary effects of structural reforms.
A topical issue in the EU public finance debate is the existence of a possible trade-off between the respect of budgetary targets in the short term and the adoption of reforms that may help to improve budgets on a permanent basis in the medium-to-long run. The reasons why structural reforms may be prevented by budgetary targets and ceilings may be related to the possible presence of direct short-run budgetary costs or to the fact that reforms are costly in political terms, so that higher spending or tax cuts may help to obtain the necessary consensus. The idea of a possible trade-off between the implementation of structural reforms and the pursuit of budgetary objectives was recently reflected in the lines for reform of the Stability and Growth Pact agreed by the European Council, which acknowledge that under certain conditions the budgetary impact of major structural reforms can be taken into account in the implementation of the EU fiscal framework. In future years, the evaluation of budgetary impact of reforms is likely to acquire greater relevance in the implementation of the SGP. Better knowledge of the implication of structural reforms for public finances will be required in EU fiscal surveillance.