MNI EXCLUSIVE: Eurozone To Decide 2022 Fiscal Stance By June

Eurozone finance ministers will determine the bloc's most appropriate fiscal stance for 2022 by June, which could be crucial for the eventual decision on when to reimpose the strict limits on public debt included in the Stability and Growth Pact, EU officials told MNI.

It had previously been expected that the general escape clause of the Stability and Growth Pact could be deactivated at the end of 2021, but concerns are mounting over a possible double-dip recession this year amid a sluggish vaccine rollout and tightened Covid restrictions.

Some officials told MNI it is already clear budget policies will need to continue to be somewhat accommodative through 2022, but one source said the situation "is so fluid [that it is] difficult to make projections yet."

DIVISIONS

Fresh Commission forecasts and data will be available by midyear and will feed into the decision on 2022's optimal fiscal stance, the source added.

Eurogroup President Paschal Donohoe and EU Economic Affairs Commissioner Paolo Gentiloni have called for fiscal policies to remain supportive, with the latter warning earlier this week of a social crisis which might threaten the fabric of the EU.

Ministers still await a proposal from the Commission for the reform of the Stability and Growth Pact, one official noted.

The source refused to comment on reports Gentiloni and more conservative fiscal voices with the Commission are divided over the thrust of reform, although accepting "there may not be a single voice on the topic" as the debate over automatic rules or Commission discretion on the issue lingers on.