The ECB insists that only 20% of the energy actions of the Twenty-seven are temporary and encourage consumption reduction
The energy crisis has presented the European Union (EU) with a double challenge: it must reduce the impact on households and businesses while encouraging consumption reductions to curb inflation. Eurozone economy ministers -Eurogroup- debated Monday on how to deal with this complex situation, following criticism from European Central Bank (ECB) President Christine Lagarde, who last week assured that only 20% of the measures taken by countries are temporary and specific and therefore help to reduce inflationary pressures.
Mechanisms such as the ‘Iberian exception’ or the German package of 200,000 million euros of government aid are extensive measures that are not sustainable for long. In addition, Lagarde warned that they are driving up demand and inflation, counteracting the effect of the ECB’s rate hikes. “The European bank is doing its part and it is important that the eurozone’s fiscal policy does not contradict these efforts,” Trade Commissioner Valdis Dombrovskis said on his arrival at the cabinet meeting.
Specifically, they discussed Lagarde’s own proposal, who advised taking measures so that countries subsidize a fixed part of the users’ consumption and pay the rest at market prices.
While the European economy continues to slow down. The European Commission warns that data indicates that activity is weakening and that prices will remain high in the medium term, although specific figures will be released Thursday with the release of the autumn economic outlook.
In this context, the discussion on energy measures is more important than ever. As indicated by the Commissioner for Economy, Paolo Gentiloni, “an economic contraction is expected in the winter and we need to do more to cope with this situation and avoid fiscal problems in 2023.”
Brussels is currently working on its proposal for the reform of the fiscal rules, which it hopes to present tomorrow. Spain is confident that the initiative is based on the document presented to the Netherlands and that it is considering easing tax and debt rules to adapt to the economic realities of each country.
Spain’s first vice president and economy minister, Nadia Calviño, pointed out that this “seems to be a good base to start with”. “Fiscal responsibility and debt reduction must be compatible with economic growth,” he stressed. At the same time, he pointed out that the eurozone needs to formulate its policy well in order to moderate inflation.
The eurozone is also concerned about the impact of the US plan to deal with rising prices. Economy ministers discussed the law that Washington wants to promote contains “extremely protectionist” measures for EU exports and presupposes “discrimination” against the European market.
Italy’s Economy and Finance Minister Giancarlo Giorgetti – of Matteo Salvini’s League – made his debut at the meeting on Monday and sent a warning message to the rest of the countries. The 17 states also discussed budget projects for 2023, although a more in-depth exchange is expected at their final meeting of the year, in December.
It also launched the election process for a new Eurogroup president. Paschal Donohoe’s term expires in January, but the Irishman hopes to extend the position.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
