Varadkar does not believe Europe is facing into recession

The Tánaiste is currently at the World Economic Forum in Davos, where the possibility of recession is one of the key themes
Varadkar does not believe Europe is facing into recession

Tánaiste Leo Varadkar does not believe that the European Union is facing into a recession.

Mr Varadkar is currently at the World Economic Forum in Davos, where the possibility of recession is one of the key themes.

It follows fears the United States could be about to slide into an economic downturn, with suggestions the EU could follow.

However speaking to Bloomberg in Davos on Tuesday, Mr Varadkar said he does not believe this will be the case.

“We have fiscal levers, and some of the rules around this building growth pact relaxation are being extended, so I don’t think we’re facing into recession,” he said.

“Not as rapid growth as we might have hoped for certainly, but who knows, and we can’t take that for granted.”

The EU’s fiscal rules are set out in the Stability and Growth Pact (SGP) that seeks to ensure sustainable public finances in the interest of the union's stability.

Key fiscal rules include a three per cent of GDP threshold for a headline deficit, a 60 per cent debt-to-GDP threshold, and a balanced budget after adjusting for the economic cycle.

However, the normal operation of the fiscal rules has been suspended since March 2020.

This allows member states to depart from regular budgetary requirements in order to take all necessary measures to address the pandemic, sustain their economy and support an ensuing recovery.

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