The maintaining the general escape clause of the Stability and Growth Pact in 2023 and its deactivation from 2024, recommended today the European Commissionpresenting the “European semester spring package”.
The Commission considers that the conditions are met to maintain the freezing of EU fiscal rules in 2023, given the “increased uncertainty and strong downside risks to the economic outlook” due to the war in Ukraine. The unprecedented increases in energy prices and ongoing supply chain disruptions justify extending the general escape clause until 2023, according to the Commission.
The Commission considers that its continued activation general escape clause the 2023 will give the necessary “space” in national fiscal policies to react immediately when needed. At the same time, it will ensure a smooth transition from broad economic support during the pandemic to an increasing focus on interim and targeted measures and the “fiscal prudence” required to ensure medium-term sustainability.
For 2022, the Commission recommends for the EU as a whole one “Expansionary fiscal stance”, due to policies for to mitigate the effects of higher energy prices and the support needed by people fleeing Russia’s military offensive against Ukraine.
For 2023, the Commission recommends a “prudent” fiscal policy due to the “special nature” of the macroeconomic shock caused by Russia’s invasion of Ukraine and its long-term impact on the EU’s energy security needs. Fiscal policy should expand public investment in green and digital switchover and energy security. “The full and timely implementation of the National Recovery and Sustainability Plans (RRPs) is the key to achieving higher levels of investment,” the Commission said.
“Fiscal policy should be prudent in 2023, controlling the growth of nationally funded primary current expenditure, while allowing automatic stabilizers to operate and providing temporary and targeted measures to mitigate the effects of the energy crisis and provide humanitarian assistance. to people fleeing the Russian invasion of Ukraine. “
Finally, according to the Commission, Member States’ fiscal plans for 2023 should be based on prudent medium-term adjustment paths that reflect the fiscal sustainability challenges associated with high debt levels to GDP that have been further increased by the pandemic. Fiscal policy should be prepared to adjust current expenditure to the evolving situation.
What does the maintenance of the Escape Clause mean for Greece?
Maintaining the escape clause increases the country’s fiscal flexibility for next year but The € 43 billion given for pandemic support will not be given again. And not just because there will be a spending cut with leaks from foreign media saying that the increase in spending can not exceed the growth of the country’s GDP.
Even the escape clause was offered to the … Greek dish free from restrictions, in government they would be afraid to bring gifts from Brussels and would … spend responsibly. This is because the markets are lurking and they are ready to punish the waste. The lending rates of Europe and Greece as a heavily indebted country are already increasing even more. In addition conditions have changed in relation to the two years 2020-2021 and the markets are much more “irritating”, note the officials of the Ministry of Finance. This is because there will be no bond purchase program from the ECB and the government is not going to jeopardize the path to the holy grail, which is nothing more than the investment stage.
At the moment, however, there is no room for additional support measures. The financial staff counts the receipts day by day and expects to have a complete picture of the tourist reservations so that they may proceed to some targeted interventions from July if the … fund allows it.
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