The Eurogroup will coordinate more support measures for energy prices
The Ministers of Economy and Finance of the Eurozone (Eurogroup) will hold their first meeting of the year on Monday, in which they will review the economic situation, will coordinate their support measures for families and companies due to energy pricesthey will address the future of fiscal rules and take stock of progress towards the possible introduction of the digital euro.
The Eurogroup begins the year with the hope of being able to avoid a recession to which a large part of the forecasts pointed months ago or that, at least, it will be a moderate contraction that opens the door to a gradual growth phase.
In addition, they will take advantage of their first meeting of the year to welcome to the new member of the club, Croatia, which has been part of the eurozone since January 1, thus becoming the twentieth member of the euro.
As usual, the now twenty countries that use the European currency will review the current economic situation characterized by a slowdown in activity and high inflationbut now with a downward trend after having reached levels never seen before thanks to lower energy prices, especially gas.
In November, the European Commission predicted a contraction of activity in the euro zone in the last quarter of 2022 and the first of this year, but the resistance observed in the euro economies in the last months before the end of the previous year (in third quarter GDP growth was 0.3%, higher than expected) begins to raise optimism in the community capital.
“There is some slowdown in economic activity and then a gradual recovery is expected later this year. Whether there will be a recession is not clear for now, we may avoid it. But if it is observed, it is expected to be smooth,” a senior European official summarized ahead of the appointment.
In this context, the Eurogroup will also resume talks to deploy a more coordinated response to high energy prices after a phase in which they adopted aid for households and general and universal companies, contrary to what both the Community Executive and the European Central Bank (ECB) requested.
The heads of Finance in the euro zone already promised in December to modify their aid to better focus it on the most vulnerable groups and to be more focused on support rents instead of intervening in prices. On this occasion, France and the Netherlands have been invited to explain to the rest of their colleagues their national support measures in the face of the energy crisis.
“The objective is coordinate, not create political pressure or force countries. We want to give Member States good practical solutions to the problems they face,” the same sources explain.
They will also resume their talks on the tax rule reform that limit the deficit and the debt of the Member States – a debate that Brussels launched at the end of the year but that still generates deep divisions among the euro countries – and they plan to adopt a declaration regarding the fiscal position of the euro area to this year.
Finally, the Eurogroup will take stock of the progress made with regard to the possible introduction of the digital eurowhose work is being led by the ECB, still in the research phase that it wants to finish before the end of 2023, so that later, if it decides to continue with the project, it will give way to the next stage.
While the body led by Christine Lagarde continues with this task, the European Commission plans to present in the second quarter of the year the legal framework on which an eventual digital euro would be based, although this does not necessarily mean its creation.
The Government’s Vice President for Economic Affairs, Nadia Calviño, will meet on the margins of the Eurogroup meeting with the Economy Commissioner, Paolo Gentiloni, with whom she will address “current” issues such as the economic evolution general and of Spain in particular or the update of the recovery plan, indicated sources from his department.