23 May 2022, Brussels – The European Commission proposed today in its Spring Package to continue to suspend the EU fiscal rules capping Member States’ debt and deficit for another year – till the end of 2023.
“This move is necessary because Member States will need to spend to accelerate the energy transition, strengthen social protection and increase wages to protect our societies from rising food and energy prices – even if it means debts and deficits will remain high, if not increase”, said Isabelle Brachet, CAN Europe fiscal policy reform coordinator.
The general escape clause of the Stability and Growth Pact was activated in 2020 to allow Member States to spend more than usual in order to mitigate the economic and social impacts of the covid-19 pandemic. However, the necessity to further suspend the EU fiscal rules for another year clearly illustrates the inadequacy of these rules in today’s context, where substantial public investments are needed to cut Europe’s dependence on Russian fossil fuels and minerals.
There is a risk, however, to see the discussions about the reform of the EU fiscal rules lose momentum as these rules will anyway not be applied until the end of 2023. Suspending existing rules on an ad hoc basis to respond to successive crises is not a viable substitute to forward-looking reforms of the EU fiscal rules to make them fit for today’s challenges – especially climate change.
“The crisis resulting from the war in Ukraine was unexpected. But the climate emergency is neither unexpected, nor totally unavoidable. We therefore call upon the European Commission to issue as soon as possible its Communication proposing orientations to reform the EU economic governance. Reformed EU fiscal rules are urgently needed to incentivise public spending in the just transformation of our economies and societies”, concluded Isabelle Brachet.
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Note: Every Spring, the European Commission publishes recommendations to each Member State on how to boost jobs, growth and investment, while maintaining sound public finances (so-called Spring Package). This year, these Country-specific recommendations are taking into account the need to accelerate Europe’s transition towards renewable energy in order to end our dependence on fossil fuels from Russia.
Masha Perovic, Communications Coordinator masha.perovic/at/caneurope.org
Isabelle Brachet, EU Fiscal Reform Policy Coordinator, isabelle.brachet /at/ caneurope.org