The European Commission is giving Belgium and the other EU Member States budgetary breathing room for one year longer. After the corona pandemic, it is now the war in Ukraine, high energy prices and ongoing disruption in supply chains that are driving the Commission to put a stop to strict fiscal rules in the freezer section.
In March 2020, the ‘general escape clause’ of the Stability and Growth Pact was activated. The landmark decision allowed member states to pump money into their economies to navigate them through the coronavirus crisis. EU countries have traditionally had to keep their budget deficits below 3% of GDP and reduce their debt ratio towards 60%, but exceptional circumstances require exceptional measures, the Commission reasoned.
Normally, the clause would be deactivated from 2023 and Member States would then have to re-commit to the fiscal rules. But the escape clause will remain in force for another year and would only disappear again in 2024, the Commission announced on Monday. She refers to the war in Ukraine and the bleak economic forecasts that it will bring, the “unprecedented” high energy prices and the ongoing disruption of global supply chains.
Nevertheless, the Commission asks Member States to adopt prudent fiscal policies in 2023.