BE STRONGLY LINKED TO THE FURTHER DEVELOPMENT OF THE ' CONCERTED ACTION ' APPROACH TO ECONOMIC POLICY IN THE COMMUNITY .
ABOVE ALL , FOR THE SYSTEM TO BE CREDIBLE AND DURABLE FURTHER PROGRESS WILL HAVE TO BE MADE IN REDUCING THE AVERAGE AND THE DISPERSION OF INFLATION RATES ; THE PROGRESS ACHIEVED IN EXTERNAL PAYMENTS SITUATIONS WILL HAVE TO BE CONSOLIDATED ; A STEADY EXPANSION OF REAL DEMAND AND OUTPUT WILL HAVE TO BE MAINTAINED , WITH SPECIAL RESPONSIBILITIES ASSUMED BY THE MOST STRONGLY PLACED MEMBER STATES .
5 . GUIDELINES FOR 1979
THE GUIDELINES THAT FOLLOW CARRY FORWARD AND EXTEND THE CONCERTED ACTION DECISION OF 24 JULY . THE PRESENT TIME IS THEREFORE A SIGNIFICANT ONE FOR ECONOMIC POLICY NOT ONLY BECAUSE OF THE PREPARATION OF THE EUROPEAN MONETARY SYSTEM , BUT ALSO BECAUSE IT IS A PERIOD OF IMPLEMENTATION OF THE DECISION OF JULY .
IN PARTICULAR THE BUDGETARY MEASURES DECIDED BY THE FEDERAL REPUBLIC OF GERMANY ON 28 JULY HAVE NOW PASSED THROUGH THE LEGISLATURE . FRANCE HAS SINCE IMPLEMENTED A LARGER BUDGET DEFICIT IN 1978 , AND THE UNITED KINGDOM ' S EXPANSIONARY 1978/79 BUDGET HAS BEEN ENACTED . BELGIUM AND THE NETHERLANDS HAVE BEEN ADOPTING IMPORTANT NEW BUDGET POLICY PROGRAMMES IN WHICH THE FUTURE GROWTH OF PUBLIC EXPENDITURE IS BEING CONSTRAINED MORE TIGHTLY , PERMITTING NONETHELESS A POSITIVE SHORT-RUN POLICY STIMULUS TO THE CONCERTED ACTION PROGRAMME . LUXEMBOURG IS PROCEEDING WITH ITS STIMULATIVE MEASURES . DENMARK , WHILE RETAINING A MODERATELY EXPANSIONARY POLICY , HAS TAKEN STEPS TO STRENGTHEN ITS PUBLIC FINANCE SITUATION AND ITS STABILIZATION POLICIES MORE BROADLY . IRELAND AND ITALY ARE BOTH IN THE COURSE OF PREPARING MAJOR CHANGES IN BUDGETARY POLICY FOLLOWING THE ' GREEN PAPERS ' OF EARLIER THIS YEAR IN IRELAND AND THE ' PANDOLFI PLAN ' IN ITALY ; BOTH ARE AIMED AT CONSTRAINING OR CUTTING CURRENT PUBLIC EXPENDITURES , REALLOCATING RESOURCES TO DEVELOPMENT ORIENTED INVESTMENT EXPENDITURE , WHILE CUTTING THE PUBLIC DEFICIT AS A SHARE OF GDP .
OVERALL THIS SET OF POLICY ADJUSTMENTS AMOUNTS TO A SUBSTANTIAL NET STIMULUS FOR THE COMMUNITY ECONOMY . THE DIFFERENCES IN THE MEASURES AS BETWEEN MEMBER STATES ARE DELIBERATELY AIMED AT ACHIEVING A MORE CONVERGENT AND STABLE STRUCTURE OF BALANCE OF PAYMENTS POSITIONS . THEY ALSO REFLECT THE NEED TO CORRECT PUBLIC FINANCE TRENDS IN A NUMBER OF COUNTRIES WHERE THE GROWTH OF PUBLIC EXPENDITURE HAS BECOME EXCESSIVE , OR INBALANCED AS BETWEEN CURRENT AND INVESTMENT EXPENDITURE .
AS REGARDS MONETARY POLICY THE PRESENT STRATEGY IS ONE IN WHICH ALL MEMBER STATES PURSUE SPECIFIC QUANTIFIED OBJECTIVES , BE IT MONEY SUPPLY OR CREDIT NORMS IN THE CASE OF THE FOUR LARGER ECONOMIES , AND/OR THE DISCIPLINE OF A FIXED EXCHANGE-RATE RELATIONSHIP IN THE CASE OF THE OTHER FIVE MEMBER STATES . THESE OBJECTIVES FIRST OF ALL AIM AT MAINTAINING OR IMPROVING MONETARY STABILITY ; HOWEVER , AT THE SAME TIME THE MANAGEMENT OF MONETARY POLICY MUST ALLOW AND HELP THE COMMUNITY ECONOMY TO RETURN PROGRESSIVELY TOWARDS ITS POTENTIAL PERFORMANCE