MNI BRIEF: No EU Escape Clause Extension Seen Into 2024

The Escape Clause from the European Union's fiscal rules will be deactivated at the end of next year even if a new fiscal rulebook is still to be agreed, sources have told MNI.

“The hope is that we will have a new fiscal framework in place by then," one source said, but the belief in Brussels is that even if not, it would be hard to see the General Escape Clause remaining in place, with Bruss.els perhaps seeking more targeted flexibility going forward. The Commission must make a decision on the Escape Clause by spring or summer 2023 (MNI BRIEF: States' 23 Draft Budget Plans Must Be Tightened- EC)

On current policy, EU officials believe that the opportunity to tighten fiscal policy in support of the ECB should have been seized much earlier. However, governments should continue to support the inflation fight, officials say, with the fiscal stance remaining neutral until it is clear that inflation is going down and that the central bank tightening cycle is concluded (MNI: EU Fiscal Scolding Seen Falling On Deaf Ears