The European Commission, on Monday proposed suspending strict fiscal rules in the European Union (EU), for an additional year, amid the economic fallout from the Ukraine war.
The EU Trade Commissioner, Valdis Dombrovskis, who stated this during a news conference in Brussels, explained that the proposal was to help EU member states “weather the storm” of Russia’s invasion of Ukraine.
The commission was expected to reinstate the EU’s Stability and Growth Pact this in 2023 as the bloc’s economies improve, however, the war in Ukraine renewed calls for an extension.
EU member states are now expected to agree to the proposal.
The pact stipulates that member states may not take on more than 60 per cent of their economic output in debt, and caps budget deficits at three per cent of gross domestic product (GDP).
The commission shelved the debt and deficit rules until 2023, in the early days of the pandemic.
This was due to the high debt burden EU member states had to take on to cushion the economic impact of COVID-19.