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European Semester Spring Package: Paving the way for a strong and sustainable recovery

On 2 June, the European Commission presented the European Semester Spring Package, which focuses on providing fiscal guidance to Member States as they continue the process of gradually reopening their economies.

European Semester 2021, Press Conference of Valdis Dombrovskis, Paolo Gentiloni, Nicolas Schmit, ©European Union
European Union

date:  03/06/2021

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This guidance aims to help Member States strengthen their economic recoveries, making the best possible use of the Recovery and Resilience Facility (RRF), the key instrument at the heart of NextGenerationEU. The European Semester has been adapted this year, given the links to Member States' recovery and resilience plans, laying out the investments and reforms that the RRF will finance. The activation of the general escape clause of the Stability and Growth Pact in March 2020 allowed Member States to react swiftly and adopt emergency measures to mitigate the economic and social impact of the pandemic. On March 3 2021, the Commission's Communication on fiscal policy clarified that the decision to deactivate the general escape clause should be taken based on an overall assessment of the state of the economy based on quantitative criteria, with the level of economic activity in the EU compared to pre-crisis levels as the key quantitative criterion. On the basis of the Commission's Spring 2021 Economic Forecast, the general escape clause will continue to be applied in 2022 and is expected to be deactivated as of 2023. Fiscal policy needs to remain supportive in 2021 and 2022 even as national fiscal policies become increasingly differentiated in 2022. Once conditions allow, Member States should pursue policies to ensure fiscal sustainability in the medium term.