PES welcomes move to increase fiscal room for member states

23/03/2020

Euro

The PES warmly welcomes the decision to activate the general escape clause of the Stability and Growth Pact, proposed by the European Commission last week and approved today by the EU Economic and Financial Affairs Council (ECOFIN).

The clause will allow national governments to use all economic policy tools to do ‘whatever it takes’ to overcome the COVID-19 crisis.

PSE President Sergei Stanishev said:

“In this extraordinary period member states must be freed from ordinary budget requirements that will constrain their ability to act. Additional fiscal room is crucial for enabling member states to take the decisive steps that are needed. The activation of the clause is a welcome move which will support national governments to better protect citizens and the economy.”

The PES also welcomes the parallel decision of the EU to loosen state aid rules, so that public money can be used to sustain and support workers and businesses affected by the pandemic.

Taken together, these measures will help Europe weather the socio-economic storm caused by coronavirus. But European institutions and governments must still act rapidly in other areas to prevent an economic shock.

The 2008 financial crash showed that acting fast and acting together is the only effective answer to a crisis that affects us all, and we praise the coordinated action of Member States now to overcome the COVID-19 outbreak. These efforts must be complimented by the leveraging and mobilisation of EU tools as part of a far-reaching Economic Recovery Plan.