Investing in energy is the most productive and effective form of social policy, Minister of National Economy and Finance and chairman of the Eurogroup Kyriakos Pierrakakis<\/b>.<\/p>\n
In an interview from Luxembourg with Euronews<\/b> television and journalist Maria Tadeo, asked about the largely expected increase in interest rates<\/b> by the ECB due to inflation, Mr. Pierrakakis said that Europe’s finance ministers<\/b> do not comment on monetary policy and trust the European Central Bank to perform its institutional role by ensuring price stability and effective containment of inflation expectations<\/b>. For their part, ministers need to implement policies that do not contradict monetary policy and need coordinated policies that optimally support citizens.<\/p>\n
He added that they are required to achieve three objectives at the same time, which makes the situation even more challenging. First<\/b>, to support the most vulnerable households, second<\/b> to demonstrate fiscal prudence and third,<\/b> to ensure that policies implemented in the long term are consistent with short-term interventions. And he pointed out thatthe European Commission’s proposal for additional fiscal flexibility to facilitate energy investment is a highly targeted and fair approach.<\/b><\/p>\nThe interview<\/b><\/h3>\n
In detail, the interview is as follows:<\/p>\n
Maria Tadeo: <\/b>Minister, the European Central Bank is expected to raise interest rates. This at least is the scenario largely discounted by the financial markets.<\/b> I know that you are not going to comment on the ECB’s decisions, as its independence is a given. However, will that make your job more difficult if we are faced with a higher interest rate environment?<\/p>\n
Kyriakos Pierrakakis<\/b>: Good morning from Luxembourg. Good morning to your viewers as well. Let me start by saying that, as you rightly pointed out, Europe’s finance ministers do not comment on monetary policy. We trust the European Central Bank to perform its institutional role, ensuring price stability and effective containment of inflation expectations.<\/p>\n
On the other hand, what we know is that we have to conduct fiscal policy. We have to implement policies that do not contradict monetary policy. We need coordinated policies that optimally support citizens.<\/b><\/p>\n
Inflation is still a challenge, growth is equally a challenge. And that is why we are trying to design our policies in the most effective way to protect our most vulnerable citizens while investing in our long-term needs, particularly in the energy sector and energy infrastructure.<\/p>\n
Maria Tadeo: <\/b>And you have raised an extremely important point. The European Central Bank is raising interest rates because inflation accelerated again in May. Much of that increase is due to energy prices. However, fiscal policy should not exacerbate the situation nor work in contradiction to monetary policy.<\/p>\n
So, from a fiscal perspective, how do you intend to support households and European citizens against these bills while keeping inflationary pressures under control?<\/p>\n
Kyriakos Pierrakakis<\/b>:It is our understanding that we are called upon to meet three targets at the same time, which makes the situation even more challenging.<\/p>\n
First, we have to support the most vulnerable households, those in greatest need.<\/p>\n
Second, we have to show fiscal prudence, because we know that the fiscal situation today is more demanding than in 2022.<\/p>\n
And third, the policies we implement in the long term must be consistent with our short-term interventions. When we invest in energy, we are in fact investing in the long-term sovereignty, capabilities and needs of the European Union as a whole.<\/p>\n
We know well that the investments we have made as Europeans from 2022 onwards have allowed us to experience the crisis with 12% less intensity, according to IMF calculations, compared to what would have happened if we had not made the necessary investments<\/b>. And what is the European Commission proposing today? It proposes more fiscal flexibility in terms of investment in energy infrastructure.<\/p>\n
Maria Tadeo:<\/b> And how will this work in practice? Because you know very well that your Italian colleague, representing the government of Georgia Meloni, will say today that Italy is still asking for more flexibility in terms of energy. He argues that energy spending should not be included in the deficit and debt calculations.<\/p>\n
Is the Eurogroup open to such a proposal? Because the Italians are making it very clear that they need more support to deal with the energy crisis.<\/p>\n
Kyriakos Pierrakakis<\/b>: First of all, let me make two points. When we agreed on the escape clause for defence spending, we understood that defence investment is about Europe’s freedom. Similarly, investment in energy is about Europe’s economic independence.<\/p>\n
What do we know? We know that the best social policy is to reduce energy prices<\/b>. To reduce energy costs in a sustainable way over time and not just apply short-term measures or piecemeal solutions to address the immediate needs ahead.<\/p>\n
In this sense, the European Commission’s proposal for additional budgetary flexibility to facilitate investment in the energy sector is a highly targeted and fair approach<\/b>. It is a very balanced proposal and this is precisely the issue we will discuss today.<\/p>\n
Maria Tadeo:<\/b>The Italians, however, continue to argue that these measures will not be enough. They believe that the situation is very serious and that additional measures must be taken immediately to avoid a recession.<\/p>\n
However, this recession has not manifested itself. The worst-case scenario that many feared, perhaps even ahead of the summer, has so far not materialized. What is your assessment? How do you see the European economy evolving in an environment that remains difficult but has not reached catastrophic proportions?<\/p>\n
Kyriakos Pierrakakis:<\/b>Our mission is to make Europe more resilient. In this sense we understand that we are not in the worst-case scenario, as you mentioned, but we are not in the best-case scenario either. We are in a challenging and complex context. What has the European Commission proposed? Targeted measures, temporary measures, adapted to the needs of the situation, to support the most vulnerable and those who need it most.<\/p>\n
At the same time, it is clear that investment in energy, as I mentioned before, makes the European Union and the Energy Union more resilient. And ultimately they are the most productive and effective form of social policy. This is precisely the issue we will discuss today.<\/p>\n
Maria Tadeo: <\/b>So, just to be clear: you do not expect a recession and you believe that the worst case scenario has now been avoided?<\/p>\n
Kyriakos Pierrakakis:<\/b>We are closely monitoring the situation, based on the data that have been reviewed and updated. Inflation data have been revised upwards, while the growth outlook has been revised downwards.<\/p>\n
Are we in a stagflationary trend? Yes, there are such signs. But are we in a stagflationary regime? No. That is why we will continue to monitor developments closely. The European Commission as a whole adapts its proposals to the circumstances. Conditions have changed and that is precisely why the Commission has proposed additional fiscal flexibility for investment in the energy sector.<\/b><\/p>\n
We will monitor developments, we will discuss the different approaches on the table. I have said this publicly in the past. And we will try to take the best possible decisions.<\/p>\n
Maria Tadeo<\/b>: And one last question on this issue. The head of the IMF will also participate in the discussions. Christalina Georgieva<\/b> has stated that she is in favour of joint borrowing for joint European projects, believing that this would be in Europe’s interest. How is this debate progressing? Is it something you could support? More joint European lending?<\/p>\n
Kyriakos Pierrakakis: <\/b>The IMF was already involved in our discussions. I mentioned earlier the calculation that the impact of the energy crisis was 12% less thanks to the interventions we made. This is an IMF estimate of the impact of the energy interventions.<\/p>\n
I also had the opportunity to meet yesterday with Kristalina Georgieva in another capacity, that of Minister of Economy and Finance of Greece. And if you will allow me to make a brief observation, I find it particularly symbolic that Greece, from being a country that participated in an IMF program, has now evolved into a country that contributes expertise to the IMF’s Regional Technical Assistance Centre for South-Eastern Europe.<\/p>\n
So I believe that the work of the IMF is extremely useful and contributes substantially to the efforts that we, the finance ministers of Europe, are making. <\/b>All this will be discussed at the Eurogroup. As you know, my role as President of the Eurogroup is to express what unites us and what gathers the consensus of all.<\/p>\n
On this particular issue there are different views. However, it is certain that there is no issue that we are not prepared to discuss.<\/p>\n
.<\/p>\n","protected":false},"excerpt":{"rendered":"
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