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The European Commission will keep its debt rules on ice next year when the EU’s fiscal framework is supposed to come back into force, according to a draft guidance obtained by POLITICO.
The guidance, if left unchanged, will come as a great relief to France, Italy and Spain, which are among a half-dozen EU countries that will come out of the pandemic with even heavier debt burdens. Brussels paused the rules in March 2020 so that treasuries could prevent an economic fallout from the pandemic without fear of punishment, with the idea of reintroducing the framework starting in January 2023.
The Commission's new message, in a nutshell: The EU’s executive arm will be lenient — provided that governments get their finances under control and start chipping away at their debt.
The Commission plans to present its new fiscal policy guidance to capitals in early March so they can begin planning their draft budgetary plans — an exercise Brussels also carried out last year.
The document is a nod to the difficulties of reinforcing the so-called Stability and Growth Pact (SGP) in the post-pandemic world. Countries spent heavily to prevent mass unemployment and bankruptcies amid national lockdowns, pushing debt levels up across Europe....
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