The European Commission will propose next Monday a further suspension of EU rules governing public debt and deficits for one more year, three EU officials told POLITICO Thursday.
The rules, which seek to limit annual government deficits to three percent and public debt to 60 percent of output, were lifted at the onset of the pandemic so that countries wouldn’t be punished for trying to revive their economies with extra spending.
With many European economies rebounding in 2021, though, Brussels aimed to reinstate the rules at the end of this year. The onset of the war changed that calculation, prompting the Commission to announce in early March it would wait until May to decide.
The expectation of an extension has been in the cards, even in Northern countries like the Netherlands. But the Commission’s discussion dragged on due to divisions between Economy Commissioner Paolo Gentiloni, who supports an extension, and Executive Vice President Valdis Dombrovskis, who favors a return of the rules.
When the Commissioners met for their regular meeting on Wednesday this week, they finally decided on a one-year extension while agreeing to keep highly indebted countries under tighter surveillance, the officials said. The proposal now goes to EU capitals, who will have final say.
EU finance ministers meeting will discuss the proposed extension when they meet Tuesday but won’t likely come to a decision, one official said.
Government deficits and debt loans in the eurozone contracted slightly in 2021 compared to the year before, but they remain above pre-pandemic levels at 5.1 percent and 95.6 percent on average, respectively, according to Eurostat.
CORRECTION: This story has been updated following an editing error to clarify that the extension goes through 2023.
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