Dáil Éireann Debate, Wednesday - 31 March 2021
369. Deputy Pearse Doherty asked the Minister for Finance if the Government will support the General Escape Clause in the EU fiscal rules remaining in force beyond 2021 and the fundamental reform of the Stability and Growth Pact in the time in which it remains in force; and if he will make a statement on the matter. [3384/21]
View answerAs the Deputy will be aware, earlier this month the European Commission published a Communication on the fiscal policy response to the pandemic. This Communication provides valuable guidance to Member States on the conduct of fiscal policy in the period ahead, including in relation to the application of the General Escape Clause of the Stability and Growth Pact.
In this Communication, the Commission announced that its decision on the continued application of the clause will involve an overall assessment of the state of the EU economy, based on quantitative criteria, in particular the level of economic activity compared to pre-crisis levels. On this basis, the Communication states that current preliminary indications suggest the clause will persist into 2022 before its de-activation in 2023. However, a formal assessment on the continued activation of the clause will only be made by the Commission once its 2021 Spring Forecast is published in early May.
I am in broad agreement with the approach that has been outlined by the Commission, including the framework for deciding if the General Escape Clause will continue into next year. For as long as the current health and economic crisis remains acute, it is vital for governments to support and protect jobs and businesses. Although policy will need to remain agile and adapt to the prevailing situation, premature withdrawal of fiscal support should be avoided.
It is in this context, that my fellow Eurogroup finance ministers and I recently committed to a supportive policy stance in the euro area in 2021 and 2022. The support put in place at the European level, notably the Next Generation EU initiative and the Recovery and Resilience Facility, will be very important in this regard. The Eurogroup agreed that once the recovery is firmly under way, governments should implement sustainable medium-term fiscal strategies to tackle the increased levels of public debt.
On the broader question of reform of the EU fiscal rules, it is important to recall that there have been several overhauls of the Stability and Growth Pact since its inception, including most recently following the Global Financial Crisis, through the adoption of the Six-pack and Two-pack legislative packages. Early last year, the Commission opened a formal review of the Six- and Two-pack, including the launch of a public consultation on the operation of the fiscal rules in February 2020. Discussions around this review were paused because of the pandemic, with the public consultation suspended. I welcome the confirmation by the Commission in their Communication that they intend to relaunch the public debate on the fiscal framework when the recovery takes hold. My officials and I will actively engage in these discussions. In particular, I support efforts to enhance the transparency, predictability and simplicity of the rules. However, it must be recognised that there are difficult trade-offs involved. This means that finding agreement will be challenging.
