EU triggers deficit rules ‘escape clause’ to boost public spending

European Commission President Ursula Von Der Leyen | Stephanie Lecocq/EPA

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EU triggers deficit rules ‘escape clause’ to boost public spending

Commission President von der Leyen clears countries to pump ‘as much as they need’ into economies struck by coronavirus.



Governments can spend their way out of the economic fallout from the coronavirus without fear of reproach after the European Commission today put the EU’s deficit rules on ice.

Commission President Ursula von der Leyen made the announcement in a video online, telling the public that “national governments can pump [money] into the economy as much as they need.”

Von der Leyen triggered the rulebook’s “general escape clause,” which is reserved for when the EU or the eurozone faces a severe economic downturn or negative growth.

“This is new and never done before,” the German said. EU finance ministers are set to rubber-stamp the decision on Monday when they’re tentatively scheduled to meet by videoconference for this month’s Ecofin Council.

Countries will also be able to offer companies state aid without fear of punishment, von der Leyen added, referring to temporary measures that she unveiled Thursday.

“The state aid rules that we have in place since yesterday are the most flexible ever,” she said. “And we will do more to support you and your family through this crisis.”

This article has been updated with a new link to the video after the original tweet was deleted by the Commission.

Bjarke Smith-Meyer