MNI BRIEF: EC Sets Conditions On Defence Escape Clauses
MNI (LONDON) - The European Commission said Tuesday it will reassure financial markets that hard-won fiscal discipline in EU states will not be lost when it details the use of national escape clauses.
Brussels said it will cap the level at which states can apply the escape clause to defence spending increases at 1.5% of GDP and also limit its activation to a period of four years.
Officials are confident that they have done enough to tackle the risk that some states with constrained fiscal space might suffer market stigma if they applied for an escape clause. The national escape clause will allow states to deviate from the expenditure path set out in their medium-term fiscal-structural plans by 1.5% and this amount will also be deducted from deficits and debt as these are measured for purposes of activating the EU's Excessive Deficit Procedure States which have already submitted new fiscal-structural plans under the EU's new fiscal regime which was introduced last year will not be required to submit new ones.