How credible are multiannual budgetary plans in the eu?

We investigate the track record of multiannual budgetary plans of EU Member States formulated in the Stability and Convergence Programmes and updates. The study is based on the analysis of an original database summarising the main macroeconomic and budgetary variables projected by the Member States in their Programmes under the original SGP. Results show that the failure to achieve the projected reductions in the general government deficit reflects primarily difficulties to adhere to expenditure plans in nominal terms. This does not seem to be due to particularly unfavourable macroeconomic developments, but rather to the difficulties of EU countries to implement the reforms which would have been necessary to respect the ambitious expenditure targets. On the revenue side, negative growth surprises have been relevant, but the effect is less important. Overall, conclusions point to a need for strengthening expenditure control mechanisms in most of the EU Member States.