For the EU taken as a whole, economic activity is due to return to its pre-crisis level this year. And while there are still divergences across countries, we expect all member state economies to return to pre-crisis levels by the end ofnext year.
We are reaching a significant point for our economies.
The outlook is brighter than we predicted just a few months ago.
Vaccination rates are rising. Restrictions are easing.
The economic recovery is around the corner.
This is in no small extent thanks to the unprecedented policy
response. Fiscal and monetary policies have been working hand-in-hand
since the beginning of the pandemic.
As you know, we made maximum use of flexibility within the EU's fiscal and state aid rules, as well as in financial regulation.
The Recovery and Resilience Facility – with its €672.5 billion
available in grants and loans - will be available to all EU countries to
carry out reforms and investments in line with their national plans.
This year, we have adapted the European Semester to take into account the roll-out of the RRF and allow for its smooth launch.
So today's European Semester package comes with a slight twist.
As we are now in the process of assessing the 23 Recovery and
Resilience Plans submitted so far. Today's package focuses on setting
out fiscal guidance.
First, we can confirm that - based on our spring forecast - the
general escape clause will stay activated in 2022 but no longer so as of
Second, we reconfirm that Member States should not prematurely
withdraw fiscal support. Fiscal policy should remain supportive in both
2021 and 2022.
The RRF will contribute significantly to this, since its grants will not add to national debt and deficits.
For the EU as a whole, we expect that it should provide an economic
impulse of 1.2% of GDP and help create around 800,000 jobs by the end of
As economic recovery is taking hold and economic activity is slowly
returning to normal, fiscal policies should become more differentiated.
Those countries with high debt should pursue prudent policies, using the RRF to fund more investment.
Those countries with low sustainability risks should support their economies, including through the RRF.
At the same time, the growth of nationally financed current expenditure should be kept under control.
And it should be limited for countries with high debt.
This will allow to support the recovery and growth potential of the
economy without creating a permanent burden on public finances.
For the medium term, it is important to maintain a credible and coordinated approach.
However, at this stage, uncertainty is still high.
We do not yet know what lasting effects the crisis will leave and also the exact impact of the RRF.
This is why our guidance is still qualitative. It is also why we have
decided not to open excessive deficit procedures at this stage.
However, it is clear that, when economic conditions allow, Member
States should pursue policies aimed at prudent medium-term fiscal
positions ensuring fiscal sustainability.
We should be able to provide more precise guidance next year.
For Romania, which was already under an excessive deficit procedure
because of a high deficit in 2019, we updated the adjustment path with a
new deadline to correct the excessive deficit by the end of 2024.
This actually reflects the policy strategy outlined by the new
government in Romania in line with its convergence programme, and
building on the corrective measures taken up to now.
One final recommendation: all EU countries should improve the composition of their public finances.
They should be efficient and prioritise their spending, given the many simultaneous demands.
While we need to address the challenges of ageing, climate change and
digitalisation, we also need to deal with the consequences of the
Our greatest challenge is to set our economies firmly on the path of
inclusive and sustainable growth. We need to ensure that our next
generation will be able to enjoy high living standards across the board:
economic, social and environmental.
This is why our priority now must be to implement the reforms and investments in the national plans.
Policies to modernise labour market institutions, education and
training as well as social protection and health systems will be crucial
for the recovery and for the future strength of our economies and
This is at the core of our Employment Guidelines, which we propose to reconfirm today. Nicolas will tell you more about this.
The RRF is also an opportunity to tackle macroeconomic imbalances, where today we provide in-depth reviews.
The main sources of imbalances remain unchanged.
The economic impact of the pandemic adds to the existing
vulnerabilities, but not in a way that would require a change in our
We therefore confirm that Cyprus, Greece and Italy continue to
experience excessive imbalances, while nine other countries, Croatia,
France, Germany, Ireland, the Netherlands, Portugal, Romania, Spain and
Sweden continue to record imbalances.
Finally, a word on Greece.
Today, we adopted the report under enhanced surveillance.
Despite the challenging circumstances, Greece has taken the action
needed to meet its commitments. This report could serve as a basis for
the Eurogroup to decide on the release of the next set of
policy-contingent debt measures worth €748 million.
© European Commission
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