EU budget rules to come back after crisis: Dombrovskis

Budget restrictions for EU countries will apply again after the economic recession caused by the coronavirus pandemic is over, said European Commission Vice President Valdis Dombrovskis.

“We cannot say when, given the uncertainty,” Dombrovskis told Italian newspaper Corriere della Sera in an interview published Saturday. He added that the Commission will discuss the issue in the fall.

The EU in March activated the “general escape clause” within its Stability and Growth Pact — its rules of sound public finances — to give governments greater fiscal flexibility in responding to the economic shock unleashed by the pandemic.

It was always clear that “when we are no longer in a phase of severe economic downturn,” the clause would be deactivated, Dombrovskis said. The European Fiscal Board — an independent advisory body of the EU executive — “suggested that the clause should be reviewed by next spring at the latest,” he said.

Dombrovskis warned that capitals that used the relaxation of rules to go into deeper deficit should be mindful of the sustainability of their policies. He pointed out that Italys pre-existing deficit left its government with little room to maneuver when the crisis hit.

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