Posted on Mar 21, 2020
The European Commission, which could not hide its displeasure when member states began to seal their national borders in a bid to halt the spread of coronavirus, has now moved to formalise an agreement reached by EU finance ministers on March 5th to suspend EU budget rules that put limits on borrowing so that governments have a free hand in fighting the coronavirus, Reuters reports.
The Commission, the "guardian of the treaties", proposed late on Friday to activate the general escape clause in the rules to respond to the pandemic that has caused lockdowns in most EU countries and the closure of Europe’s borders.
“This will allow Member States to undertake measures to deal adequately with the crisis, while departing from the budgetary requirements that would normally apply under the European fiscal framework,” a Commission statement said.
EU rules say that governments have to keep cutting their budget deficits until they reach balance or surplus and have to reduce public debt every year to bring it below 60% of GDP.
Once the Commission proposal is formally accepted by EU finance ministers at their next meeting, government spending to fight the coronavirus will be excluded from Commission calculations of deficit and debt.
EU finance ministers, who have ultimate control of EU rules that limit government borrowing, agreed on March 5th that the economic impact of the virus was an emergency, and an event outside their control and so therefore EU budget rules should not apply to spending related to it.
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