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ING global economic outlook 2023 December 2022 3 A difficult return to budgetary orthodoxy The multitude of shocks over the last few years have forced European governments to deliver quasi-permanent fiscal support, leading to a significant deterioration of public finances. The subdued recovery could increase pressure on governments to step up fiscal stimulus further, which in turn could bring back debt sustainability concerns. However, as the general escape clause is unlikely to be activated again for 2024, budgets for 2024 should present more restrictive fiscal policies. A clear contradiction. This will get even more complicated as another reform – the Stability and Growth Pact – is on the European agenda for 2023. The European Commission’s proposal to build in more flexibility and practice a more tailor-made and country-specific approach makes sense but will be considered as a relaxation of the rules by Northern member states. We expect fiscal tensions at both the national and European levels.

ING Global Economic Outlook 2023 - Page 26 ING Global Economic Outlook 2023 Page 25 Page 27