Impact of the Activation of General Escape Clause during 2020-2023 on the Fiscal Position and GDP Growth in the EU

Abstract

This article examines the impact of the activation of the general escape clause on the fiscal position and GDP growth within the European Union. It aims to analyse how the general escape clause influenced public finances and economic performance of EU Member States. The research employs a qualitative and quantitative analysis of secondary data, including economic reports, statistical indicators, and professional literature. The study draws on comparative fiscal data and macroeconomic indicators from EU and international institutions to assess the effects of the general escape clause. The findings indicate that the activation of the general escape clause provided Member States with greater fiscal flexibility, which facilitated a faster economic recovery following the Covid-19 shock. However, this fiscal expansion also led to increased public debt levels and raised concerns about long-term fiscal sustainability and discipline. It highlights the trade-off between economic recovery and fiscal discipline, underscoring the need for a balanced reimplementation of fiscal rules that supports growth without compromising debt sustainability. The article contributes to current debates on EU fiscal governance by providing an analysis of the implications of the general escape clause and its role in shaping the future of the fiscal policy in EU. We recommend future studies assess the effectiveness of the reformed rules in promoting economic stability across EU Member States.