BRUSSELS (Reuters) – European Union rules that set limits on government borrowing will remain suspended in 2021 as the 27-nation bloc strives to support a recovery from the recession caused by the COVID-19 pandemic, Economic Commissioner Paolo Gentiloni said.
The European Commission, which is in charge of enforcing the fiscal rules, earlier this year suspended EU requirements to keep government deficits below 3% of GDP and to reduce public debt every year as the EU economy entered a record recession.
“In terms of fiscal policy, we sent a letter last week to EU finance ministers to provide guidance as they are preparing their national budgets for 2021,” Gentiloni told a news conference after a meeting of euro zone finance ministers.
“The General Escape Clause will remain active in the year 2021 and fiscal policies should continue to support the recovery next year, both at the level of the euro area and in individual member states,” he said.
Euro zone countries must send their draft budget assumptions for 2021 to the European Commission by Oct. 15 for checks to ensure they are in line with EU rules.
Gentiloni said that governments should carefully choose the fiscal measures they want to use to sustain the recovery because they would have to be well-targeted and temporary.
“There is, of course, a difference between a fiscal policy aimed at tackling the emergency and one that is focusing on achieving a durable recovery,” he said.
“Agility and flexibility will be key in designing and implementing fiscal policies for and during 2021.”
(Reporting by Jan Strupczewski; Editing by Pravin Char)