The Ukraine crisis and its consequences are cited as the reason for the measure. The member states still have to agree to the extension of the measure.
The strict debt regulations in the European Union are to remain suspended for another year in view of the Ukraine crisis. On Monday, the EUCommission proposes that the so-called Stability and Growth Pact should not fully come into force again until 2024. The Brussels authorities said the reason for this was the high level of uncertainty due to the war in Ukraine, high energy prices and bottlenecks in the supply chains.
At the same time, countries should control their spending. “Fiscal policy should move from universal support during the pandemic to more targeted measures,” said Economy Commissioner Paolo Gentiloni. The debt and deficit rules were suspended because of the Corona crisis and should actually apply again from 2023. The EU-Commission wants to present concrete proposals for a reform of the pact after the summer, which could then come into force in the course of the next year.
The Stability and Growth Pact stipulates that EU countries should not borrow more than 60 percent of economic output. Budget deficits are to be capped at 3 percent of gross domestic product (GDP). Many countries exceed these limits, mainly because they had to take on large debts to support the economy during the corona pandemic.
Average debt ratio falls
Most recently, the EUCommission assessed the development of state budgets positively. The average debt ratio will fall to 87 percent this year, compared to 90 percent last year, according to the agency’s spring forecast. The average deficits are expected to drop from 4.7 percent to 3.6 percent of economic output. The EU had toCommission however, adjust drastically because of the war in Ukraine, from 4 to 2.7 percent for this year.
The proposal will now be presented to EU countries. It is due to be the subject of a meeting of finance and economy ministers in Brussels on Tuesday, but no decision is expected just yet. Austria belongs to the camp of those states that see a relaxation of the EU debt rules rather critically.
(APA/dpa)