MNI BRIEF: EC To Review Escape Clause Lift After Forecasts

The European Commission will reassess whether to deactivate the so-called “escape clause” from rules on borrowing by EU states under the Stability and Growth Pact once it assembles its Spring Economic Forecast in May, the Commission said as it released its 2023 fiscal guidance

“While the “general escape clause” will continue to apply in 2022, it is expected to be deactivated as of 2023 on the basis of the Commission's Winter 2022 Economic Forecast. This will be reassessed on the basis of the Commission's Spring 2022 Economic Forecast in view of the high uncertainty,” the Commission said, in comments in line with an earlier report by MNI.

The Commission also said that - based on its Winter forecasts it was appropriate to move to a “broadly neutral” aggregate fiscal stance next year but here too it would stand “ready to react to the evolving economic situation.”

“Russia’s invasion of Ukraine will likely impact EU growth negatively, including through repercussions on financial markets, further energy price pressures, more persistent supply-chain bottlenecks and confidence effects,” Economy Commissioner Paolo Gentiloni said, according to the text of prepared remarks. “There is for now too much uncertainty to be able to quantify this impact.”