European Commission Executive Vice President Valdis Dombrovskis called on European Union (EU) member states on Saturday for fiscal prudence in the face of the current “intensely demanding period,” given high inflation and the acute energy crisis.
“All the EU economies are going through a period of intense demands. As we know, the pressures are coming from many sides: record inflation and energy supply problems, among others, which are holding back growth and restricting the political space to manoeuvre.” Therefore, it is important that we get through the difficult period with the right policies and in a coordinated way,” said Valdis Dombrovskis.
At a press conference at the end of an informal meeting of EU finance ministers in Prague, within the framework of the Czech Presidency of the Council, the European official stressed that “next year, budgetary policy has to be prudent “.
“It must prioritize fiscal sustainability and be consistent with the European Central Bank’s task of reducing inflation,” added Valdis Dombrovskis, after the ECB decided to raise its three key interest rates by 75 basis points, the second consecutive rise this year. .
And after eurozone governments admitted on Friday that the war in Ukraine and the energy crisis had increased the risk of recession, the European Commission’s executive vice president said, at the same time, that it was necessary to “help people and companies that are the ones that suffer the most, so the support measures have to be well targeted and temporary”.
“This is important to contain budget impacts, given the large scale of the shock and the limited resources available,” he added.
Valdis Dombrovskis also called for “advancing the review of the future EU economic governance framework”, noting that the European Commission will present guidelines on this issue this autumn and that “there appears to be broad convergence on these priorities”.
Specifically, the official stated that it was necessary “to ensure that the public debt effectively decreases”, to pay “due attention to the composition and quality of public finances”, as well as to reduce “complexity and improve compliance” with budget rules .
Eurozone governments have already admitted that the war in Ukraine has increased the risk of recession, but rule out that the economy is inevitably doomed and promise to take steps to combat inflation and mitigate its impact.
The rise in energy prices, aggravated by the invasion, pushed inflation in the euro zone to a record 9.1% in August and forced growth forecasts for the 19 countries to be lowered, to the point that the The ECB anticipated a recession in the event of a total Russian gas cut.
Source: TSF
