The European Commission does not want to return to the budgetary rules that the EU member states must adhere to in normal times until 2023. The condition is that economic activity in the European Union is on average at the same level as before the corona crisis, with the indicator at the end of 2019, reports the daily EU administration.
Fiscal rules were dropped last year to allow member states to spend more and to accumulate public debt in order to protect the economy.
“There is hope on the horizon for the European economy, but the pandemic continues to damage the economy and the livelihoods of citizens,” said Vice-President Valdis Dombrovskis. “Our message is that support measures should last as long as necessary. Member States should also make the most of the European Recovery Fund, because it gives them the unique opportunity to support their economies without the subsidies weighing on public finances.”
The temporary recovery fund contains EUR 672.5 billion, EUR 312.5 billion of which will be distributed among the 27 countries as a grant and EUR 360 billion is available for favorable loans. The money is intended to invest in sustainable and digital projects, which must be offset by reforms in, for example, the labor market or the pension system.
A maximum of nearly 6 billion euros is available for the Netherlands. The outgoing government has announced that it will not use the loans for the time being.
In March last year, EU finance ministers agreed to the Commission proposal to temporarily abandon fiscal rules related to the corona crisis. By activating an “escape clause” in the Stability and Growth Pact (SGP), which lays down the rules, Member States do not have to adhere to a budget deficit below 3 percent of gross national income (GNI) and a government debt of no more than 60 percent of GNI. As a result, EU countries can now pump as much money as needed into their economies with impunity to preserve businesses and jobs as much as possible.
Due to the extra billions of expenditure on combating the crisis, the deficits and debts in the countries are rapidly increasing. The Commission argues that the EU should gradually re-tighten its budget reins once health risks diminish.