ECONOMIC POLICY GUIDELINES . EXCHANGE-RATE STABILITY IN THE COMMUNITY OVER THE PAST YEAR HAS HELPED CONTAIN DIVERGENCES IN INFLATION RATES , AND TO LIMIT THE UNCERTAINTIES CREATED BY THE SECOND OIL SHOCK . MONETARY POLICY IN THE LAST YEAR , INTERNAL AND EXTERNAL , HAS BEEN MORE CONVERGENT THAN THE BEHAVIOUR OF THE REAL ECONOMY . THE LATTER MUST NOW ADJUST MORE RAPIDLY , IN WAYS ALREADY INDICATED ABOVE .
THE MEASURES TO BE TAKEN IN PASSING TO THE SECOND PHASE OF THE EUROPEAN MONETARY SYSTEM , AS PROVIDED BY THE EUROPEAN COUNCILS OF BREMEN AND BRUSSELS IN 1978 , SHOULD FURTHER IMPROVE ITS FUNCTIONING , AND STRENGTHEN ITS ROLE - ALREADY IMPORTANT - IN STABILIZING EXCHANGE RATE RELATIONS . AMONG THE OBJECTIVES SET BY THE EUROPEAN COUNCIL THE FOLLOWING MAY BE RECALLED : THE DEVELOPMENT OF THE ROLE OF THE ECU TO PERMIT IT TO BE USED FULLY AS MEANS OF SETTLEMENT AND RESERVE ASSET ; THE CONSOLIDATION OF THE CREDIT MECHANISMS OF THE SYSTEM IN THE EUROPEAN MONETARY FUND ; THE COMPLETE MEMBERSHIP OF ALL MEMBER STATES ( THE UNITED KINGDOM HAS INDICATED THAT IN PRINCIPLE IT ENVISAGES ITS FULL PARTICIPATION AS SOON AS CIRCUMSTANCES PERMIT ) ; AND A MORE UNIFIED POSITION OF THE COMMUNITY IN INTERNATIONAL MONETARY COOPERATION , INCLUDING , AS SOON AS POSSIBLE , THE DEVELOPMENT OF A COORDINATED POLICY TOWARDS THE MAIN INTERNATIONAL CURRENCIES , NOTABLY THE DOLLAR AND YEN .
THE COMMUNITY SHOULD HELP ASSURE THE ADEQUACY OF ARRANGEMENTS FOR THE RECYCLING OF OPEC SURPLUSES . IN ADDITION TO SUPPORTING THE EFFORTS OF THE INTERNATIONAL ORGANIZATIONS WHICH BRING TOGETHER ALL GROUPS OF COUNTRIES , THE COMMUNITY SHOULD PROCEED WITH AN ADAPTATION OF ITS OWN BALANCE OF PAYMENTS BORROWING AND LENDING FACILITIES TO THE NEW CIRCUMSTANCES .
( D ) BUDGETARY POLICY
GIVEN THE PREVAILING MONETARY AND FINANCIAL CONSTRAINTS THERE IS ONLY LITTLE SCOPE FOR TAKING GLOBAL BUDGETARY POLICY MEASURES TO STIMULATE ACTIVITY DURING THE CYCLICAL SLOWDOWN . THE GROWTH OF TAX REVENUE IS , HOWEVER , DUE TO THE OPERATION OF AUTOMATIC FISCAL STABILIZERS LIKELY TO SLOW DOWN OVER THE NEXT 12 MONTHS AND THE PRESENT LEVEL OF BUDGET DEFICITS COULD ONLY BE MAINTAINED THROUGH ADDITIONAL EXPENDITURE CUTS WHICH WOULD TEND TO DEPRESS ACTIVITY EVEN FURTHER . MEMBER STATES SHOULD THEREFORE AS A GROUP BE PREPARED TO ACCOMMODATE A CERTAIN RISE IN BORROWING REQUIREMENT OF GENERAL GOVERNMENT IN 1981 ; THIS NONETHELESS LEAVES SOME MEMBER STATES OBLIGED TO REDUCE THEIR PUBLIC DEFICITS IN THE CASES WHERE THESE HAVE BECOME MASSIVELY EXCESSIVE , AND PREJUDICIAL TO MONETARY STABILITY AND EFFICIENT RESOURCE ALLOCATION . THE MAJOR CHANGES IN BUDGETARY POLICY IN THE COMMUNITY AS A WHOLE NEED TO COME WITHIN THE STRUCTURE OF PUBLIC EXPENDITURE AND TAXATION . HERE PRIORITY MUST BE GIVEN TO STRENGTHENING THE STRUCTURAL BASE OF THE ECONOMY AND PROMOTING ECONOMIC GROWTH THROUGH ADAPTATION OF SUPPLY CONDITIONS . GOVERNMENTS SHOULD PURSUE EFFORTS TO RESTRICT THE EXPANSION OF EXPENDITURE ON PUBLIC CONSUMPTION , SUBSIDIES OR TRANSFERS FINANCING PRIVATE CONSUMPTION IN ORDER TO