The European Commission wants to suspend the EU budget rules, which have been suspended since the outbreak of the corona pandemic in March 2020, for another year, until the end of 2024.
The responsible Vice President Valdis Dombrovskis and Economic Commissioner Paolo Gentiloni would propose this on Monday, the Brussels authority said on Friday.
The occasion is the annual assessment of budgetary policy in the member states as part of the so-called European semester.
So far, the plan was to reinstate the rules in early 2023.
EU finance ministers still have to approve the proposal.
If it were to come into force, the EU stability pact would be out of force for almost four years, longer than ever before.
The continued validity of the "general clause" means that the EU Commission refrains from holding a member state to account for excessive national deficits or national debts.
Many states do not meet the criteria
The Stability Pact stipulates that the debt ratio of the member states may not exceed 60 percent of economic output and that new debt is capped at 3 percent of economic output.
Most states exceed these limits, mainly because they had to take on large amounts of debt during the corona pandemic to support the economy.
In addition, a number of countries - Greece, Italy, Portugal, Spain, France, Belgium and Cyprus - have a debt ratio of over 100 percent.
Greece and Italy in particular are well above this.
This makes it unlikely that these countries will ever reach the 60 percent margin again.
The Commission cited the uncertain economic situation given the ongoing war in Ukraine as justification for the repeated extension of the state of emergency.
The rules of the Stability Pact allow EU budgetary supervision of a member state to be suspended in the event of a “severe economic slump”.
This was undoubtedly the case during the Corona crisis: In 2020, gross domestic product in the euro area shrank by an average of 6.4 percent.
According to almost all economists at the time, this justified the activation of the “general clause” that allowed exit from the EU stability pact.
Economically, things are going better than expected
However, the current economic situation differs significantly: for the current year, the commission only this week forecast growth of 2.7 percent, for 2023 of 2.3 percent.
In this respect, there can be no talk of a “serious economic slump”.
It is unclear what the repeated extension of the budget emergency means for the discussion about a reform of the pact.
Originally, Gentiloni wanted to present a proposal for a fundamental overhaul in the summer.
Above all, this should boil down to tailoring a financial policy tailored to each individual country's budgetary situation.
The CSU MEP Markus Ferber sharply criticized the plans.
He pointed out that only this week the Commission forecast robust growth for this year and next.
"When economic development returns to normal, this must also apply to European debt rules," said Ferber.
"When the era of zero interest rate policy comes to an end, that should also be reflected in budgetary policy." The war in Ukraine should not be used as an excuse "to postpone the reintroduction of debt rules to the foreseeable future".Keywords: