Amid Ukraine crisis, EU finance ministers agree to tighten their belts

European finance ministers are to batten down the economic hatches for the rest of the year and all of 2023.

he Ecofin Council, meeting in Brussels under the chairmanship of Irish Finance Minister Paschal Donohoe, marked last night the end of the “quantitative easing” or priming of the pump observed in recent years against a backdrop of financial turbulence and existential threat to the single economy. currency, as well as a sustained pandemic.

This means that finance ministers will strive to contain public spending, especially next year, given the huge demands that are expected to be placed on national stock exchanges by the continuing war in Ukraine.

Officially, the European Commission is suggesting to member states that monetary policy should move from supportive to neutral next year, but this will likely mean lower living standards for the bloc’s 450 million citizens.

The fiscal situation could be particularly tight for Ireland, despite recent record fiscal grabs and better than expected performance during Covid.

Indeed, EU finance ministers will also today debate the directive on the introduction of an overall minimum level of 15% taxation for multinationals – which is expected to cut the Irish budget by €2bn a year. .

Donohoe didn’t give much yesterday as he opened the meeting of ministers from the 19 countries that share the euro, which will today discuss proposals for a fourth round of sanctions against Russia for invading Ukraine, as well as calls for Belarus to be similarly punished as an enabler of aggression.

A statement issued by the Eurogroup after its meeting last night said: “After two years in the grip of the Covid-19 pandemic, the EU is facing a decisive moment caused by the unprovoked Russian military aggression and unjustified against Ukraine.”

He added: “We also recognize that additional economic measures to support Ukraine and protect our core EU values ​​may be necessary.”

The fundamentals of the euro area economy are solid, ministers underlined, noting that unemployment in the EU had reached a record high at the end of last year, despite the continued high uncertainty surrounding the evolution of the pandemic.

“However, uncertainty has increased significantly. The economic impact of Russia’s war on Ukraine has yet to be determined and adds to the risks associated with ongoing supply chain issues,
rising energy prices and inflation remain high longer than expected.

There would be “strong fiscal policy coordination” in the euro area to deal with heightened risks and uncertainties, and the impact on individual economies, ministers said. “We are ready to adjust our political position to changing circumstances, if necessary.”

In the meantime, ministers and the Commission will “urgently address and consider concrete options” to deal with the impact of rising energy prices.