Fiscal policy: anchored to discipline[La politique budgétaire ancrée à la rigueur]

In 2004 fiscal policy has reversed its course turning to neutrality in the euro area, thus resulting in a deterioration of the government deficit to 2.9% of GDP and in the breaching of the 3% limit of the Stability and Growth Pact (SGP) by France, Germany, Italy and Greece. Founded on a conservative interpretation of the revised SGP, we project a tightening of the fiscal stance in 2005 and 2006, concentrated on the larger euro area countries. An improvement in the euro area aggregate public finances is expected together with deficit exceeding the reference value in Germany, Greece, Italy and Portugal. The fiscal stance will tighten abruptly in the United States, leading to a reduction in public deficit, which, at 3.5% of GDP in 2006, will remain above the euro area ratio at 2.6%.