BRUSSELS – European Union countries will continue to benefit from an economic safety net through next year to help their economies recover from the damage inflicted by coronavirus restrictions, the EU’s executive branch said Wednesday.
As COVID-19 spread throughout Europe and sent the EU spiraling toward its deepest recession, the European Commission activated a “general escape clause” in March 2020 that allowed member nations to deviate from normal budgetary rules.
But with vaccination programs now taking hold and the number of new coronavirus cases dropping, the commission predicts the EU economy will expand by 4.2% in 2021 and by 4.4% in 2022.
Given the positive trend, Commission Executive Vice President Valdis Dombrovskis said that “we are prolonging the general escape clause in 2022, with a view to deactivating it in 2023.”
Dombrovskis said the decision comes “with our recovery around the corner but with the road ahead still paved with unknowns. We will therefore continue to use all tools to get our economies back on track.”
He said that of all the 27 EU countries, only Denmark and Luxembourg will stand below the deficit limit of 3% of gross domestic product set out in the bloc's fiscal rule book. But no debt action will be taken against countries such as Cyprus, Greece and Italy, which have “excessive imbalances,” Dombrovskis said.
The EU extended the deadline for Romania to correct its debt ratio to 2024.
Dombrovskis urged EU members to take advantages of the loans available under the bloc’s 750 billion-euro ($914 billion) coronavirus recovery plan to help stimulate their economies further.
The EU's Recovery and Resilience Facility is made up of grants and loans, and benchmarks must be met for the money to be paid out. Loan conditions are more onerous.