To deliver such a fiscal stance, the euro area must adopt a more collective approach which takes account of the differences in situations across countries: (i) for Member States which are over-achieving their fiscal objectives, use their fiscal space to support domestic demand and quality investments, including cross-border ones, as part of the Investment Plan for Europe; (ii) for Member States that need further fiscal adjustments under the preventive arm of the Pact, make sure to be broadly compliant with the requirements of the Stability and Growth Pact; (iii) for Member States under the corrective arm, ensure a timely correction of their excessive ...[+++]deficits, including by providing fiscal buffers against unforeseen circumstances.

Fiscal policies should reflect the economic conditions and sustainability risks at Member State level, while ensuring a good co-ordination of economic policies and a coherent fiscal stance across the Union and the euro area, making use of fiscal space where available to support growth and investment.

The budgetary stance remained neutral given the broadly unchanged cyclically-adjusted budget deficit, although the play of automatic stabilisers helped to stabilise the economy.

As regards the need to 'reach or maintain sound budgetary positions', an appropriate time path must be found between the speed of the necessary budget consolidation and an appropriate fiscal stance supporting the transition.

The EU's cyclically-adjusted primary balance remained broadly unchanged, indicating an overall neutral fiscal stance in 2003.

However, fiscal performance in 2002 and 2003 slipped again and consolidation was effectively abandoned as deficits increased to 4.6 per cent and 6.3 per cent of GDP respectively. The expansionary fiscal stance contributed to an increase in domestic demand and a current account deficit projected at 4.4 per cent of GDP for 2003.