The economy and finance ministers of the euro zone agreed over the weekend to act jointly to protect households and companies from the increase in energy prices by coordinating their financial support policies with the European Central Bank (ECB) to avoid rising inflationary pressures.
Ministers from the 19 countries agreed that support should focus on providing money to help people and industry cope but should be seen as an emergency measure and carefully targeted where possible. Business support must be coordinated across borders to preserve fair competition.
“We recognize and agree that we must reduce inflation,” Paschal Donohoe, chairman of the euro zone finance ministers, told a news conference. “Failure to do so will make our citizens, the peoples of Europe, poorer for longer,” he said.
France, Germany and other countries have announced multibillion-dollar packages of measures to help businesses and consumers cope with rising inflation. The Bruegel think tank estimates that aid from EU governments has already reached 282 billion euros, with more on the way. However, the support itself can fuel inflation, creating a vicious circle.
Our interventions will be coordinated with the ECB’s monetary policy and we will do everything possible to prevent it from adding to the inflationary pressure, to which the central bank and we, as finance ministers, are responding”, Donohoe said.
The ECB raised its key interest rates by an unprecedented 75 basis points and promised further hikes as it prioritizes fighting inflation as the bloc heads toward a likely recession and gas rationing in winter.
Asked how they would reconcile pumping more money into the economy through support measures while keeping inflation from rising, Donohoe said the answer lies in the scale and design of the measures, but it is a complex challenge.
The European Commissioner for the Economy, Paolo Gentiloni, stated that the difficulty lies in the aid being specific and temporary.
The president of the ECB, Christine Lagarde, pointed out that the design of the European support plans has improved to some extent, but pointed out that there is still room for refinement.
“About 10% of the measures were adapted and targeted, now we are moving to 15%, and there is a clear need for improvement in that regard,” he said, adding that, when it comes to efficiency, income transfers are preferable. at price caps.
In Brussels, EU energy ministers also met over the weekend to discuss a long list of European Commission proposals to tackle the region’s energy crisis, including a price cap for Russian gas, a tax on power plants that do not use gas, among others.
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