The European Commission Proposes Letting Go of Fiscal Rules to Tackle Corona Crisis

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The European Commission proposes that EU Member States abandon the current EU fiscal rules so that governments can “pump as much as necessary into their economies”.

 

For this, chairman Ursula von der Leyen wants to activate a particular “escape clause”.

She says that in a video released by the committee on Friday evening. “We have never done this before,” said the German about the proposal “in response to the pandemic.”

Due to the corona outbreak, entire sectors such as aviation and the catering industry have been paralyzed, factories are shut down, companies are going bankrupt, and employees are on the street.

The committee now says “to deliver” following its pledge to “use all policy instruments to support the Member States to protect their citizens and mitigate the serious socio-economic impact of the pandemic”.

The rules for national budgets are laid down in the so-called Stability and Growth Pact (SGP). It states that a Member State’s budget deficit should not exceed 3 percent of its gross national income (GNI) and its national debt should not exceed 60 percent of its GNI.

A country can be fined if it breaks the rules. Due to unforeseen billions of expenditure to combat the crisis, the deficits and debts in the euro countries are rising rapidly.

The Member States must approve the proposal.

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