The European Commission proposed this Wednesday that the rules of budget discipline and public spending by the governments of the bloc remain suspended until the end of 2022, since the coronavirus pandemic still seriously affects the economy.
These rules had been suspended a year ago, when the European Union (EU) plunged into a deep recession due to the brutal impact of the pandemic.
The suspension of the limits allowed the countries of the EU to have money to recover their economies and help companies to survive the restriction and confinement measures.
The Executive Vice President of the Commission, Valdis Dombrovskis, announced that the final decision on the matter would be adopted “in the spring” (March to June), in light of new forecasts on the performance of the economy.
“The main criterion – he added – will be to know if the level of economic activity in the EU or in the Eurozone exceeds the one recorded before the crisis.”
Shortly before, in an official note, Dombrovskis had indicated that the suspension of spending limits “must remain active in 2022, and be deactivated in 2023.”
By then the European economy is expected to be in full recovery, and thus the EU would re-implement budgetary discipline and limits on public spending.
“There is a glimmer of hope on the horizon for the EU economy, but for now the pandemic continues to hurt people’s living standards and the economy in general,” the official said.
Therefore, he said, “our message is that fiscal support must continue as long as it is necessary.”
For his part, the European Commissioner for the Economy, Paolo Gentiloni, pointed out that the battle against the pandemic has not yet been won and therefore “by 2022 it is clear that fiscal support will still be necessary.”
“It is better to be wrong by doing too much than by doing too little,” he added.
The European regulation, known as the Stability and Growth Pact, is a set of rules that limit public spending to 3% of GDP and public debt to 60%.