Is the Commission planning to cancel the stability pact?

Is the Commission planning to cancel the stability pact?

On 5 November 2020, Italian Member of the European Parliament (MEP) Mara Bizzotto of the Identity and Democracy Group, posed a written parliamentary question to the European Commission:

“On 19 September 2020, Commissioners Valdis Dombrovskis and Paolo Gentiloni sent a letter to the Member States to guide them in drawing up their national budget legislation. In that letter they confirmed the validity of the general escape clause, through which ECOFIN suspended the stability pact last March until 2021, saying that decision would be reviewed in spring 2021.

Currently Member States are preparing new measures to stem the second wave of COVID‑19. Coming just a few months after the first wave, this threatens to cause many already suffering economies, such as Italy’s, to collapse, with the undeniable delay in activating the Recovery Fund a further factor.

In view of the official statement at the end of the ECOFIN meeting of 23 March 2020, according to which ‘Ministers remain fully committed to the respect of the Stability and Growth Pact’, and given the Netherlands’ recent requests for the Stability and Growth Pact to be linked to the Recovery Fund;

whereas the stability pact is an inefficient mechanism which hinders economic recovery, as I pointed out in my previous questions,

and new rules will be needed in Europe’s post-pandemic scenario to encourage a real recovery. Given these facts:

1. For how long will the escape clause remain in force and the stability pact be suspended?

2. Is the Commission planning to cancel the stability pact permanently?

3. If not, how will it readjust budgetary constraints in light of the very serious economic situation in the EU?”

On 19 January 2021, Economy Commissioner Paolo Gentiloni responded on behalf of the European Commission stating: “The general escape clause, which does not suspend the Stability and Growth Pact (SGP), will remain activated as long as the severe economic downturn for the euro area or the Union as a whole persists. The Commission will re-assess the economic situation in spring 2021.

The Recovery and Resilience Facility will offer additional and unprecedented large-scale financial support to increase investments and implement reforms, with a positive impact on potential growth.

The Commission launched a debate on the review of the EU economic governance framework, including the SGP, in February 2020. Following the outbreak of the COVID-19 pandemic, the debate was put on hold.

It will resume when conditions allow and at full scale. The changed circumstances since the Commission published its communication on the review in February add new challenges and put the questions for this public debate in a new context. A common fiscal framework remains necessary to ensure economic and financial stability in the euro area.

The possible ways of reform should aim at a framework which is simple and enforceable, and up to new and old challenges.”


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