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The European Commission on Wednesday formally proposed keeping the EU’s deficit rules on hold through 2022 but urged governments to keep an eye on public spending to avoid runaway debt.
EU governments in the coming weeks are set to approve Wednesday’s proposal, which will allow them to provide support to workers and companies hit by the pandemic without fear of punishment from Brussels.
The Commission made the proposal as part of its European Semester, an annual process that aims to keep EU spending in line with the rules. The deficit rules have been on ice since last year, shaping the Semester into a stock-taking exercise that offers fiscal guidance.
Part of Wednesday’s guidance urged EU capitals to keep a watchful eye on their spending and encouraged them to consider the prudent and sustainable fiscal policy they should pursue from 2023 — assuming the economy is back to pre-crisis levels and recovering well.
“As our economies emerge from this crisis, we will be faced with significantly higher debt levels,” Economy Commissioner Paolo Gentiloni said during a press conference to unveil the Semester package.
“We all know that budget deficits will have to be brought down from the exceptional levels of this and last year,” he added. “But this must be done in a way that doesn’t repeat the mistake of sacrificing public investment and other productive spending that is necessary for the future growth of our economies.”
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