The preventive arm of the stability and growth pact (SGP) supports EU governments in achieving their commitments on sound fiscal policies and coordination by setting for each country a budgetary target.
This benchmark is a rule which contains the net growth rate of government spending at or below a country’s medium-term potential economic growth rate, depending on the country's position in relation to its medium-term budgetary objectives (MTOs).
Legal basis and related stages
The Significant Deviation Procedure aims to give Member States the opportunity to correct a deviation from their medium-term objective (MTO) or the adjustment path towards their MTO in order to avoid the opening of an Excessive Deficit Procedure.
Since 2024, Member States are no longer required to submit stability or convergence programmes to the Commission and the Council following the entry into force of a new economic governance framework.
To ensure the coordination of fiscal policies among Member States sharing the euro as their currency and because economic policy is recognised by the EU Treaty as 'a matter of common concern', governments are required by European economic governance.