Dombrovskis: Continued suspension of EU Stability Pact will depend on spring assessment

He said a possible further suspension of the SGP rules “will depend on the economic situation and how we see it in May-June”. [EPA-EFE/KENZO TRIBOUILLARD]

The suspension of the Stability and Growth Pact in 2022 will depend on economic developments, European Commission executive vice-president Valdis Dombrovskis told EURACTIV’s partner Lusa, pointing to a possible decision in the spring.

“Our plan is to return to that discussion and potential decisions in the spring cycle of the European semester, which is typically in late May and early June,” Dombrovskis told Lusa.

He said a possible further suspension of the SGP rules “will depend on the economic situation and how we see it in May-June”.

“We are not prejudging the outcome of that decision,” he said, emphasising that for the time being “what is clear to the member states for 2021 is that the safeguard clause [allowing the suspension of the SGP] will continue to be activated”.

The decision, implemented at the beginning of the economic crisis triggered by the COVID-19 pandemic, allows EU member states to disregard the eurozone’s budgetary rules, which limit government deficits and public debt respectively to 3% and 60% of gross domestic product.

The suspension of the rules applies until the end of 2021 and there is no decision for 2022 for the time being.

Asked whether all options were on the table, Dombrovskis, replied: “Certainly. We are not prejudiced against any decision, we will have to see the economic situation and make the decision based on that.”

“We are still facing a very complicated situation regarding the COVID-19 pandemic. 2020 was a year of decisions, we decided on maximum flexibility within our budgetary and state aid rules, allowing member states to support their economies, companies, workers, and finance health spending,” he said.

Portugal’s Prime Minister António Costa, who currently holds the EU’s six-month rotating presidency, said there was consensus that support to EU member states should only be withdrawn when their GDP returns to 2019 levels, allowing for a suspension of the Stability Pact beyond 2021.

“There is a very large consensus among economists at the international level that support should not be reduced too soon,” Costa said on 15 January, saying however that this was not a definitive position.

The most consensual option is to return to the full implementation of the Stability Pact  rules once the eurozone economy is back at the kind of GDP levels seen in 2019, Costa said.

[Edited by Frédéric Simon]

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