Mr. John McCarthy:

It is. The reforms of the Stability and Growth Pact were necessitated by the crisis. The reforms in 2011, particularly in the preventive arm of the pact, introduced what is known as an expenditure rule.

This is sometimes called the expenditure benchmark. To assess compliance with progress towards one's medium-term objective, one looks at the improvement in the structural budget balance but one also complements that analysis with how one is performing vis-à-visthe expenditure rule. What the expenditure rule essentially says is that one will have nominal growth in revenue in line with the potential growth rate in the economy. If, for example, GDP is growing by 3% in nominal terms, revenue will grow in line with that figure in the long run. The figure varies from year to year because the elasticity can vary depending on, for instance, the composition of aggregate demand. However, on balance and over time, revenue growth tends to move in tandem with GDP growth.
If one maintains expenditure, net of discretionary measures on the revenue side, below the potential growth rate of revenue, one automatically gets an improvement in one's structural position. The technical assumption is that expenditure, net of discretionary measures on the revenue side, is kept sufficient to achieve the required improvement towards the medium-term objective. It is quite technical.