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A Proposal to activate the EU Fiscal Framework General Escape Clause in response to COVID-19

The EU Fiscal Framework General Escape Clause

The EU Ministers of Finance agree with the Commission’s proposal to activate the fiscal framework’s general escape clause in response to COVID-19.

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On 23rd March, the EU Ministers of Finance agreed with the Commission’s proposal to activate the general escape clause of the Stability and Growth Pact (SGP). The escape clause has never been activated since its addition to the SGP in 2011 following the preceding years of economic crisis. The clause allows for temporary deviation, without endangering fiscal sustainability, from the normal requirements for all Member States to pursue fiscal policy in a situation of generalised crisis caused by a severe economic downturn of the euro area or the EU as a whole. The Commission, now endorsed by Council, considers that the COVID-19 pandemic qualifies as an “unusual event outside the control of government” and that the conditions to activate the general escape clause are fulfilled.

Whilst remaining committed to respect the STP, Member States will be allowed to undertake measures to deal adequately with the crisis, while departing from the budgetary requirements that would normally apply under the European fiscal framework.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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