Sinn Féin spokesperson on Finance Pearse Doherty TD has called on government to ensure that the General Escape Clause in the EU Fiscal Rules remains in force well beyond 2021 to safeguard economic recovery in the years ahead.

Teachta Doherty said that the EU should use the period under the General Escape Clause to fundamentally reform the Stability and Growth Pact, replacing its focus on debts and deficits with targets for reduced unemployment and public investment.

Speaking today, Teachta Doherty said:

“On March 13th 2020, the European Commission activated the General Escape Clause in the Stability and Growth Pact, which governs the EU fiscal rules.

“This allowed member states to waive the fiscal rules and do all that was necessary to respond to the Covid-19 crisis and its economic consequences.

“Under current plans, the General Escape Clause will no longer apply after 2021.

“This would require the government from under the fiscal rules to adopt an austerity plan to cut deficits and public debt from next year.

“To do so would cause untold economic damage. For as long as the pandemic continues to require public health restrictions and a reduction in economic activity, the General Escape Clause should remain in force.

“The Commission is due to reassess its application in the coming months.

“The Taoiseach and Minister for Finance must work with other member states to ensure that the General Escape Clause remains in place well beyond 2021.

“This will allow the state to continue protecting incomes and supporting businesses for as long as this crisis lasts.

“The EU must then use this period in which the General Escape Clause is in place to reform the fiscal rules, which have failed member states since they were first adopted.

“The Stability and Growth Pact, which codifies the fiscal rules, is a recipe for prolonging recession and deepening unemployment.

“Its obsession with deficit reduction and debt ratios is out of date and out of time.

“In this low-interest, low-inflation environment, deficits must become the instrument, not the objective of fiscal policy.

“The Stability and Growth Pact should be reformed to replace its focus on debts and deficits with targets for full employment and greater public investment.

“The government must work for an extension of the General Escape Clause and reform of the EU fiscal rules for as long as it remains in place.”