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I outlined to ministers this afternoon the main messages to the euro area emerging from our Spring European Semester package adopted earlier today, which in turn is built on our Spring Forecast, showing that the war changed the course of our economy: not only inflicting human and territorial devastation to Ukraine, but also changing the picture of our economy with a sharp decrease of our growth and with higher inflation.
Moreover, as you know, this outlook is subject to downside risks, that we translated into adverse scenarios in our forecast and high uncertainty. In other words, our economy is still far from normality. And this is why we concluded in favour of extending the general escape clause of the Stability and Growth Pact through 2023.
This extension will provide the space for national fiscal policies to react quickly to evolving circumstances in highly unpredictable times. As I stressed this morning, we are not proposing a fiscal free-for-all. National fiscal policies should combine higher investment with controlling the growth in current expenditure, especially in high-debt countries, which should ensure a prudent fiscal policy in 2023, within the framework that Paschal has just mentioned.
This means that Member States should continue to transition from the universal support provided during the pandemic to more targeted measures to mitigate the impact of the energy crisis and to assist those fleeing the war....
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