The European Commission has provided clarifications regarding the escape clause, noting in a document that its activation is not considered appropriate at this stage and can only be allowed in the event of a severe economic downturn in the Eurozone or across the EU.
Thus, despite the risks to economic prospects that have emerged in recent weeks against the backdrop of the Middle East crisis, and despite challenges—particularly regarding energy costs—the Commission is effectively ruling out fiscal easing, emphasizing that any fiscal measures must remain aligned with the agreed paths for net expenditure growth set by the Council.
More specifically, the document published in the context of today’s extraordinary Eurogroup meeting states:
The activation of the General Escape Clause (GEC) or national escape clauses is not deemed appropriate at this stage. Upon recommendation by the European Commission, the Council may issue a recommendation to activate the GEC of the Stability and Growth Pact, allowing member states to deviate from their net expenditure paths. However, activation of the GEC is permitted only in the case of a severe economic downturn in the euro area or the EU as a whole. Although risks to the Union’s economic outlook have increased significantly in recent weeks, it cannot at this stage be determined that this condition has been met or will be met imminently.
At the same time, the National Escape Clause (NEC) has already been activated for certain member states in relation to defense spending. The activation of both the GEC and NEC is subject to the condition that medium-term fiscal sustainability (the so-called “sustainability clause”) is not jeopardized. The Commission must assess this condition before recommending activation. In a related staff working document, the Commission noted that activating the NEC for defense would increase deficits and debt in many member states and delay debt reduction in countries with already high public debt for several years.
Energy support measures, as a rule, cannot be classified as one-off. For a measure to be considered one-off, it must be inherently temporary—that is, it cannot become permanent. The assessment also considers the degree of government control and the risk of creating inappropriate incentives for policymakers, particularly regarding public finance sustainability.
As recent experience has shown, even when energy support measures are introduced as temporary, they often remain in place for a long time or even become permanent.
Since there is nothing preventing them from becoming permanent, they cannot be classified as one-off measures. Moreover, unlike responses to natural disasters, governments have a significant degree of control over the size and design of such measures.
Therefore, treating energy support measures as one-off would deviate from established practice and risk undermining the concept of one-off interventions. For these reasons, energy support measures adopted in response to price increases in 2021 were not classified as one-off, and the same approach was applied to measures taken during the COVID-19 pandemic.
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