‘Inflation and war in Ukraine mean EU must prolong Fiscal Rules suspension’ – MacManus

Sinn Féin MEP Chris MacManus, a member of the Parliament’s Economic Committee, has said that the EU Commission “should not hesitate” to prolong the suspension of the fiscal rules until at least 2024. He said the effects of inflation and the war in Ukraine meant this option must be seriously considered. He was speaking in the European Parliament following reports that Commissioner Gentiloni was considering the issue given the ongoing inflationary pressure and the outbreak of war in Europe.  

MacManus said:

“We are experiencing a very fragile recovery already threatened by consistently higher prices than forecast and now the turmoil caused by the Russian attack on Ukraine. This brutal attack has, rightly, provoked sanctions from the EU and others. These sanctions are acknowledged not to be cost-free for people living in the EU and their impact must be considered on the recovery.

We must also take into account that we have no clarity yet on the revision of the fiscal rules. To insist on a return to the fiscal rules for 2023 without any idea what those rules will be is not sensible. January 2023 is only a matter of months away and we have very a fluid and dangerous economic and political situation. The Commission should not hesitate to continue the suspension for at least another year.

We do not know what is coming in the weeks and months ahead but we must retain the maximum flexibility to deal with it.

That means ruling out a return to the Fiscal Rules in nine months’ time. It is simply not a realistic plan.

A deep and radical reform of the fiscal rules, including for example a shift from hard-wired rules to fiscal standards, is required if they are not to immediately become an anchor weighing  down recovery on their reintroduction. This revision must be completed and time allowed for governments to familiarise themselves with the new framework.  The Commission should not risk recovery and instead signal clearly that the rules will not hit a fragile recovery next January.”