According to the Vice-President of the European Commission, Valdis Dombrovskis, the region faces great uncertainty and strong downside risks, hence the proposal to extend the general safeguard clause, so that the countries of the bloc can act quickly.
At a press conference, he warned that in view of this decision, fiscal policy will have to be prudent in 2023, and keep the growth of primary current expenditure financed with public funds under control.
The budgetary rules, known as the Stability and Growth Pact, were established in 1997 to set limits for public spending, deficit and debt in relation to the Gross Domestic Product (GDP) of each country.
In the case of public spending, this is expected to be 3.0 percent of each economy’s GDP, while the debt ceiling is 60 percent, although due to the Covid-19 pandemic its application was suspended as of 2020.
The extension of this measure reflects the EU’s concern about the likely economic downturn as the crisis deepens due to continued high energy prices and persistent problems in supply chains.