“Average Eurozone public debt is set to peak at 91% of GDP in 2013. Given such a debt level, nominal growth needs to be at least 2.3% in order for the golden rule to apply rather than the debt-reduction rule. Given an average yearly price increase of 1.8% (the average during the period 2000–102), this implies a mere 0.5% in real economic growth – which is extraordinarily low.
For countries with debt-to-GDP as high as 120%, it would only require a 3% nominal growth in order for the golden rule to be more stringent than the debt-reduction rule. If we take into account an average price increase of 1.8%, this implies 1.1% in real economic growth. Such growth is still remarkably low. During the period 1992–2008, only four Eurozone countries had nominal growth below 3% on average during a period of at least four years.3
Even in such rare cases of lacklustre growth, the debt-reduction rule would most likely not be applied in a stricter manner then the golden rule. The Stability Pact explicitly foresees a flexible interpretation of its fiscal rules in case of a protracted period of very low growth. In those circumstances, both the debt-reduction rule and the golden rule would thus be applied in an ad hoc manner.
Finally, if a country has a debt level well above 120%, the debt-reduction rule would again probably not be more stringent than the golden rule. EU rules allow for a less strict application of the debt-reduction rule when the primary balance (which excludes interest expenditure) suggests so. For highly indebted countries, the primary balance will be in a major surplus if the actual deficit would be only 0.5% of GDP. Even for Greece, the debt-reduction rule would hence be of little relevance if it meets its national golden rule.”