Brussels, Jan. 25, 2021 (Lusa) – Portugal's finance minister argued on Monday before the European Parliament that the stimulus to the European economy must be maintained until the Covid-19 pandemic "loses momentum", not least because the "tremendous effect" of the current wave is slowing the recovery.

Addressing the European Parliament's Economic and Monetary Affairs Committee by videoconference to present the priorities of the Portuguese Presidency of the Council of the European Union (EU) - at a session that would eventually be suspended due to persistent technical problems and postponed to a date to be set - Mr Leão stressed that "this wave is much more intense than expected and will therefore necessarily affect the economic outlook for recovery this year across Europe".

"This wave is having a tremendous effect on the European economy, with very restrictive measures on various sectors of activity, and it is therefore very important that the measures to support the economy are maintained", he said, considering it fundamental to ensure that the stimulus to the economy is not withdrawn "too soon" and that the suspension of the rules of the Stability and Growth Pact (SGP) continues in force.

According to João Leão, "it is important in this emergency phase to support the maintenance of employment and the productive capacity of companies", but it will also be necessary "to maintain this support until we move to the next phase, when the pandemic starts to lose strength".

"And in that sense, it is very important that fiscal policy and state aid remain as exceptional measures so that the economy does not suffer so significantly from this crisis," he said, adding that it is also important to "ensure that the escape clause [of the SGP] remains in place until the economy returns to the pre-crisis levels of 2019.

Last year, in view of the unprecedented impact of the pandemic on the European economy, the EU activated the clause temporarily suspending European rules on budgetary discipline - on matters such as deficit and public debt - to allow member states to deal with the situation, and this suspension will be in place at least until the end of 2021 and could possibly be extended, not least because the economic recovery is not expected to be completed before the end of 2022, according to the European Commission's macroeconomic forecasts.

Finally, Mr Leão reiterated that the seriousness of the pandemic situation also "makes it even more urgent to ensure that the European recovery plan and the different recovery plans at national level are approved as soon as possible to ensure that the economy begins to feel the effect of these plans on the ground".

ACC/AYLS // AYLS

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