The European Commission Presented The Autumn Economic Policy Package

The European Commission Presented The Autumn Economic Policy Package

the European Commission presented the autumn economic policy package, including opinions on draft budget plans for the euro area for 2021 and policy recommendations for the euro area. This is the second phase of the 2021 European Semester cycle, which began in September with the publication of the Annual Sustainable Growth Strategy, which provided EU Member States with strategic guidelines for developing their recovery and resilience plans.

Minimum two-year recovery

Package is based on the autumn 2020 economic forecast prepared in a context of high uncertainty, which assumes that production in the euro area and the EU will remain below pre-pandemic levels in 2022 due to the economic shock caused by the corona crisis. The European Commission's opinions focus in particular on whether the planned expansionary budgetary measures for 2021 are temporary and, if not, whether compensatory measures are planned.

The EU emphasizes sustainable budgets

The Commission concludes that, overall, all national budgetary plans are in line with EU recommendations. Most measures focus on supporting economic activity in times of uncertainty. The European Commission has found that some of the measures set out in the draft budgetary plans of France, Lithuania, Slovakia and Italy are not temporary or are not accompanied by compensatory measures. The Commission noted that, as regards Belgium, France, Greece, Portugal, Spain and Italy, given the level of their public debt and the major medium-term sustainability challenges that existed in these countries before the corona crisis broke out, it would be particularly important to to maintain medium-term fiscal sustainability when adopting budgetary support measures. At the same time, Brussels recalled that Romania has been subject to the excessive deficit procedure since April 2020, but for the pandemic, the European Commission will not review Romania's budgetary situation until spring 2021. The Recommendation on the Economic Policy of the Euro Area provides individual advice to its Member States on issues that affect the functioning of the euro area as a whole. This year also includes policy guidelines on the priorities that the euro area should address in its recovery and resilience plans. The call for euro area Member States states that they need to ensure that their fiscal policies remain expansionary in 2021 and that these policies need to be refocused towards prudent medium-term positions as soon as epidemiological and economic conditions allow.