MNI BRIEF: States Must Retain Agile Fiscal Policies: Gentiloni

It is clear that the Ukraine war will have a significant economic impact on the EU and that next week’s Spring Forecasts from the European Commission would need to trim its previous growth estimates, Economy Commissioner Paolo Gentiloni said Monday, adding that the policy implications of the new, lower projections were clear.

“First, we need to maintain agile and responsive fiscal policies, much like we did during the pandemic. The Commission will provide updated guidance for fiscal policy in 2023 as part of the European Semester spring package that we will present later this month,” he said.

The Commission is widely expected to extend its suspension of the General Escape Clause from the Stability and Growth Pact as a result of the economic impact of the war and the need for governments to support business and consumers hit by high energy prices. Speaking in Lisbon, Gentiloni also stressed the green transition and diversification of energy supplies away from Russian sources would need to be accelerated as well as the “effective” implementation of the NexGen EU programme.