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Fiscal support for a sustainable recovery in the euro area

Fiscal support for a sustainable recovery in the euro area

In its latest assessment of the euro area fiscal stance, the European Fiscal Board concludes that national policy plans for 2022 amount to an appropriate fiscal stance for the euro area as a whole. This column discusses how, against the backdrop of a strong economic rebound this year and next and the unwinding of emergency measures, the underlying fiscal deficit of the euro area should halve between 2021 and 2022, while nevertheless remaining well above pre-crisis levels. With significant fiscal support still in the pipeline, more targeted measures should avoid excess economic scarring and encourage sustainable growth while facilitating the green and digital transitions.