The European Commissioner for the Economy, Paolo Gentiloni, said on Wednesday 26 February that “discussions” would begin “in the coming months” on the possible use of the flexibility of the Stability and Growth Pact to help Member States whose economies are affected by the COVID-19 virus epidemic and who are struggling to meet their fiscal commitments.
“There are flexibility clauses in the Pact that deal with exceptional circumstances. How these exceptional circumstances can be used will be the subject of discussions in the coming months”, he said at the presentation of the reports on the socio-economic policies of all Member States in 2019 (see EUROPE 12434/4).
He was questioned whether the coronavirus epidemic, which is spreading in Europe (see EUROPE 12434/6), could be considered as a relevant factor within the meaning of the Pact allowing an affected country to deviate from the fiscal trajectory agreed at European level.
Mr Gentiloni recalled that Italy had benefited from such flexibility after being severely affected in 2016 by earthquakes (see EUROPE 11657/13).
No quantification at this stage of the negative impact on the economy
On Wednesday, the European Commission was unable to quantify the economic impact of the ongoing coronavirus epidemic, as the uncertainties remain too great.
But Mr Gentiloni reported a “partial materialization” of the downside risks associated with it. “It will have an impact” in economic terms, the Commissioner said, with China now accounting for 18% of world trade.
The Vice-President of the European institution, Valdis Dombrovskis, noted a negative impact of COVID-19 on the economy characterized by “reduction of air travels, of tourism” and “disruption of supply chains”. “Clearly, the economic impact is there”, he said.
A more precise update may take place in May, when the Commission will present its country-specific socio-economic policy recommendations for 2020. (Original version in French by Mathieu Bion)