BRUSSELS – European Union countries should move to a neutral fiscal stance next year from a supportive stance in 2022, with high debt countries focusing on tighter fiscal policy and low debt ones on more investment, the European Commission said on Wednesday.
“Based on the 2022 Winter Economic Forecast, the Commission is of the view that transitioning from an aggregate supportive fiscal stance in 2020-2022 to a broadly neutral aggregate fiscal stance appears appropriate in 2023, while standing ready to react to the evolving economic situation,” the Commission said.
The Commission’s winter economic forecast, already cutting euro zone growth projections to 4.0% in 2022 from 4.3% expected earlier, were made two weeks before the Russian invasion of Ukraine, which the Commission said would further hit growth.
“The Commission is of the view that starting a gradual fiscal adjustment to reduce high public debt as of 2023 is advisable, while too abrupt a consolidation could negatively impact growth and, thereby, debt sustainability,” it said.
(Reporting by Jan Strupczewski)
