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The European Union extended on Monday with another year the exemption under strict budgetary rules for EU member states due to the ongoing Russia-Ukraine war that started on Feb. 24.
As part of the 2022 European Semester Spring Package, the European Commission decided to prolong into 2023 the escape clause of the Stability and Growth Pact, the bloc's fiscal rules preventing member states to spend over their means.
The principle of fiscal prudence, demanding EU member states to keep the budget deficit under 3% and public debt under 60% of the GDP, was suspended in 2020 because of the COVID-19 pandemic that put an extraordinary burden on state budgets.
"The extension of the general escape clause to 2023 recognizes the high uncertainty and strong downside risks in a situation where the state of the European economy has not normalized," EU Commissioner for Economy Paolo Gentiloni said, presenting the new European Semester Package.
According to the document, the move is necessary because "the context of war in Ukraine, unprecedented energy price hikes and continued supply chain disturbances" require "a space for national fiscal policy to react promptly when needed."
According to the latest forecasts, the EU expects 2.7% GDP growth for this year, down from the earlier projection of 4%. -
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