Brussels wants member states to keep spending to maintain recoveryComments
Brussels wants EU countries to keep investing and spending in order to maintain the recovery from the pandemic.
The European Commission (EC) said that its so-called "general escape clause", which allows national governments to support their economies through uncapped spending and borrowing policies, should be maintained until 2023.
EU member states are bound by the Stability and Growth Pact (SGP) - a set of rules designed to ensure they pursue sound public finances and coordinate their fiscal policies.
But due to the magnitude of the COVID-19 pandemic, the "general escape clause" of the SGP was activated in March 2020, something that is only used in exceptional circumstances to protect European citizens and businesses, as well as to support the economy after any significant shock.
Paolo Gentiloni, the EC's economy commissioner told Euronews that it would be an error to reimpose rules on deficit control and public debt.
"The message we are sending is that we are to keep up the support," he said. "The fiscal stance in our economy is in 2021 and in 2022 because indeed the recovery is underway. We have a brighter outlook for our economies, but we should avoid the mistake that was made in previous crises to be too quick in restricting the policy support.”
He added reimposing spending rules and austerity measures too quickly following the 2008 financial crisis damaged societies and the lives of European citizens.
"To go back to fiscal consolidation too soon...this created this double-dip recession in Europe. Now, of course, we should be concerned about high levels of debt and cautious in increasing the burden of current expenditure, but this is in a framework of persisting support to our economies," he said.
The bloc’s €750bn recovery fund will soon start its first disbursements to the hardest-hit sectors and member states in a drive to improve economies beyond the position they were in prior to the pandemic.