Just hours earlier, Paschal Donohoe, still Irish finance minister, had been elected president of the Eurogroup. This time he has got the unanimous support of his colleagues. There was no other candidate. This 48-year-old Dubliner, a big fan of literature, skips the meeting that everyone responsible for the EU Treasury, the so-called Ecofin, is organizing for EL PAÍS and three other European media to attend. He will soon step down as Irish Finance Minister, although he will remain in his country’s executive, retaining the position he has just renewed. His first term, launched in the summer of 2020, has not been a quiet one in the first months of the pandemic. It doesn’t look like inflation, energy crisis and war are going to stop it for another two and a half years.
ask. Is the ECB doing enough to tackle this extremely high inflation? Other central banks have been more aggressive.
answer. Yes, I think it is. And I also have full faith that the European Central Bank will take appropriate steps in the future. If you look at the development of the euro area after the pandemic, we have on the components of inflation and it is caused by energy prices, I think the ECB has made the right decisions and will make the right decisions.
P. Is there adequate coordination between monetary and fiscal policy?
R. What makes this challenge so complex is the need to coordinate monetary, budgetary and energy policy. Therefore, the coordination horizon is wider than before. Now we all have a role to play in next year’s budget decisions.
P. But are you satisfied with the coordination so far with the ECB and between the governments themselves?
R. I think we were all operating under emergency conditions. Suddenly, every finance minister faced the risk of being told by companies that if they did not act and help them, they would face an employment risk and a very rapid contraction after spending two years fighting the pandemic. were facing We were working to deal with the effects of the war and that was fair. If we look at the euro area’s economic performance in 2022 – even if inflation is worse than we expect – given the first quarter shock [cuando comenzó la guerra]Economic indicators have been maintained. I think that provides some degree of recognition for the decisions that have been made this year. We were in a very risky environment.
P. How did ministers receive the commission’s proposal to refine aid with the doubling price of electricity and gas?
R. I saw a very clear desire to recognize and consider the implementation of that type of structure and, in the event that governments cannot implement this initiative, other ways to better design and calibrate the fiscal response for the year ahead. seek. That political and policy-making space will need to be harnessed in the first half of 2023.
P. Are normal financial instruments sufficient for this crisis or are more needed?
R. Combined with the existing budgetary tools, the flexibility member states still have [en referencia a la suspensión de las reglas fiscales], provide the necessary scope for today’s challenges. Funding and the existing political consensus carry on into the next generation. It takes a commitment to pay for and use it well. But the European Union has already taken a decision regarding the use of existing funds. [en referencia al plan RepowerEU],
P. So no new money?
R. Some governments are publicly advocating new financing models and new funds. However, the only consensus that exists between finance ministers is about the instruments we have already agreed to use.
P. Is there consensus in the Eurogroup on how to respond to US anti-inflation legislation?
R. At this point there is agreement on three distinct points. Firstly, you have to focus on diplomacy, not on increasing difficulties. Second, we support the work of the Technology and Commerce Council to work with all of the United States. And third, for now, Eurogroup ministers have recognized that this is an important economic step that Europe should take note of. There are different views on what our response will be. This is always the case when we deal with such an important issue.
P. Is there a risk that Europe will start a subsidy race with the United States?
R. We already have a comprehensive grant system in the Recovery Fund. We have to evaluate our efforts in terms of legal funds to reduce inflation [en Estados Unidos], Going into subsidy competition with the United States would be to the detriment of all of us when taxpayer money is so valuable. That’s why diplomacy and participation in the Trade and Technology Council are so important.
P. At the end of the Eurogroup meeting, you and the Commissioner for the Economy, Paolo Gentiloni, talked about preparing the reform in March. Isn’t this time frame too optimistic considering the skepticism shown by the German minister?
R. Yes, the deadline is demanding. However, by next March we will have to make significant progress on economic governance. And the reason is that we are already in the second quarter of 2023 and the governments should take their decisions for the budget of 2024. So, although the calendar is difficult and demanding, we really have no choice but to move forward. We have a lot to do in January, February and March.
Wake up with analysis of the day by Bernd Gonzalez Harbor
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