Europe must reinvent growth formula in changing world, Eurogroup boss tells Euronews

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Europe must reinvent growth formula in changing world, Eurogroup boss tells Euronews  Europe must reinvent its growth model in changing world hit by tariffs and force, Eurogroup boss tells Euronews in exclusive interview.  READ MORE : http://www.euronews.com/2025/11/14/europe-must-reinvent-growth-formula-in-changing-world-eurogroup-boss-tells-euronews  Subscribe to our channel. Euronews is available on Dailymotion in 12 languages

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00:00The European Union is looking for ways to secure funding for Ukraine for its military

00:12and budgetary needs going into 2026 and 2027. One of the options that is being floated

00:18is an unprecedented reparations loan pegged to Russia's frozen assets. But the proposal

00:23comes with questions and a lot of strings attached to it. To debrief, we're joined by

00:28Pascal Donoghue, head of the Year Group. Sir, thank you very much for joining us on Year

00:33and it's always great to see you. Of course, this idea, the reparations loan, there's never

00:38been a financial operation, not even Germany after the Second World War was made to pay

00:42reparations in this way. What makes you think this is going to work?

00:46So firstly, Europe and the European Union have been at the forefront of supporting the people

00:51of Ukraine and their struggle for freedom. Through various financial instruments, we've

00:56made available very substantial financial support so far. And as you acknowledge in your

01:01question, the debate is now underway here regarding what will be the next way in which this will

01:06be done. We're awaiting a formal proposal from the Commission with regard to it. Our Prime

01:12Minister has discussed it here a number of weeks ago. And one way or the other, we will

01:17find a way of continuing to support the economy and the people of Ukraine and the debate regarding

01:24that. And the discussion in relation to us is now firmly underway.

01:28Because one way or another, this is going to happen. However, there are many options,

01:32not a formal proposal, but there are options that we know are being considered. And some

01:36is just straight cash, bilateral agreements, going to markets and tap markets together for

01:41joint debt. Some still argue the best way to do it is the frozen assets. That is really

01:46the best option on the table. Is that your view? I know it's a difficult question as head of

01:50your group, but is that your view? There are strong merits in relation to that proposal,

01:54but there are also trade-offs and issues that are being considered. At the heart of how we've

01:59been able to support the people of Ukraine and their security needs, is we've also managed to

02:04maintain the stability of the European Union and our financial stability. And that is why I go back

02:10to the earlier point that I made. We have been at the forefront, as we should be, for reasons of

02:16choice and necessity in supporting the people of Ukraine and their freedom and their security,

02:22and Europe will continue to do that. And this is obviously a leading option regarding how it will

02:28be done. And when we receive a formal proposal from the Commission, the progress and debate in

02:34relation to that will intensify. But I'm clear on what the end point and what the objective is,

02:38and that's what we're all striving to, to find further medium-term funding, and even sooner than

02:44that, for the people of Ukraine and their security.

02:46And just a final point. Of course, you have discussions with your Belgian counterparts. I've

02:51been told by diplomats that their concerns are very fair, but the requests they're making,

02:56they're too maximalist, because there is no zero risk operation. Do you understand where they're

03:02coming from? And do you think ultimately you'll find a form of compromise where everyone feels comfortable?

03:07I entirely understand the concerns that our Belgian colleagues have,

03:11their Prime Minister and their Finance Minister has put forward. I understand where they are coming

03:16from. And their view, their issues are a really important ingredient in the process that is underway.

03:22And all I would say is, as very important as this route is, and it's a route that has been thoroughly

03:27explored, we should not lose sight of all of the financial support that has been made available so far,

03:33and the different avenues that are being explored to ensure that it's continued.

03:37And now you're back for a new term. There's a lot of expectations around the Eurogroup this time

03:44around. I've heard many times the Eurogroup has to go back to its big days, where it really served to push

03:49through breakthroughs in Europe. How do you see your new role? And also, what's top of your agenda now?

03:54What's the one thing that you say this cannot wait? The digital Euro, number one. Number two,

04:00how we continue to maintain financial stability through the coordination of budget policy. And

04:06number three, the work that we have underway regarding investment and savings union.

04:11And you mentioned the digital Euro. I'm going to ask you a question, perhaps if you indulge me. There's

04:14a question that I keep asking myself, which is the European Central Bank, and you yourself,

04:20you just said, it's very important that we get the digital Euro. But when you look at the US,

04:24they have issued an executive order in which they say, no, they do not want to push for one,

04:29and they do not want to promote one. So if they think it's a risk, why are we saying it's European?

04:34It's a good thing.

04:35Well, it's up to the US to determine what is the right way of developing their currencies,

04:41or currencies within their own regime, and they will make a decision in relation to that.

04:47From our point of view, I think there are really two strong merits in relation to the development

04:51of the digital Euro. First, that it will be a spur then, a catalyst for the innovation that we need

04:58regarding a proper European payments infrastructure in this area. And second, I have seen how the

05:05physical Euro is an economic force for integration and ultimately for long-term stability. I believe the

05:13same will happen with the digital Euro. The US have made their choice. That is entirely their right.

05:19And it's up to us here in Europe to determine what we believe is the right avenue for us. And that's

05:24what we're doing.

05:25And of course, I also want to ask you about progress made, but also progress to be made.

05:31The Drag report, it has been talked about now for a year, some believe only 20%, and that's really the

05:36upper estimate has been accomplished. Do you worry there is a sense now of fatigue? Do you worry that there's

05:43a sense that it's very difficult to turn this from a report into reality? And how do you accelerate this

05:49process? Because there is criticism that this report is not being taken as seriously as it should be.

05:54I see no evidence of fatigue, given the circumstances that Europe is confronting.

06:00We have to explore all the avenues that are there to accelerate a rate of growth that is higher than

06:08many predicted, but not high enough. And I can see very clearly, while of course compromises will have

06:14to be found. Creativity will have to be utilised. I can see very clear recognition from all governments

06:21within the European Union of the scale of challenge and opportunity that we are now confronting,

06:26and the need to do more at a faster pace than we have done before.

06:31And what do you make of, of course, the criticism that the Drag report came out a year ago,

06:35he said this is existential, is radical change or slow agony. And some would argue a year later,

06:40not only the implementation is slow or slower than it could be, but also Europe is in a much

06:44weaker spot, meaning a trade deal that was very imbalanced, 15% tariff, expenditure to NATO, 5%

06:53additional spending. There is no definitive path work in terms of how defence spending is going to

06:58be carried through. The idea of joint debt still is a debate that nobody wants to touch. What do you

07:02say to those who argue, well, it's been a year, not only we're not doing the job, it's actually worse.

07:06That we've revised our growth forecast up for the Euro area over the last number of weeks,

07:12that all of the predictions that many offered with complete certainty regarding the economic

07:18effects of the war of Ukraine leading the economy of Europe into a recession, not only have they not

07:23materialised, we've managed to maintain stability, that many parts of the European Union have record

07:28levels of employment, and that I am seeing a very comprehensive effort within the European

07:34Union to get what I believe is the correct and appropriate balance between the maintenance of

07:39medium-term financial stability and investing in our future. Now, none of this is to say for a moment

07:44that we don't have a huge amount of work to do, and I've been at pains in our interview to acknowledge,

07:49Maria, that we actually need to go faster in what we are doing. But what I would respectfully make

07:55the case for is the foundation of stability that Europe and the European Union is creating at the

08:01moment has real value. And I believe we need to make the case for it, we need to make the case

08:07from an economic and from a security perspective.

08:10And the impact of the tariffs, just very quickly, have you digested what that is going to look like

08:16for the real economy? Would you argue the worst is over? Or do you still need time to see how this is

08:20going to manifest? Because if, I mean, they triple, it's a significant amount.

08:25Well, maybe if I just speak as Finance Minister for Ireland with regard to that at the moment,

08:29there's little doubt at all that the impact of tariffs is going to have an effect on the medium-term

08:35growth outlook for the Irish economy, and we've already acknowledged that. But then what falls

08:40to us then as political leaders with agencies, as a group of democracies, is to look at what are the

08:46decisions that we can take that over the medium-term are capable of offsetting that. In the short-term,

08:53the hit, the impact has not yet been as high as many would have expected. That is in no small part

08:59due to the work the Commission have done. But of course, for an open trade-intensive part of

09:05the world as we are, when the rules of trade change, it has an effect. And it's now up to

09:10all of us to respond back and to look after ourselves in a different way.

09:14Do you still believe in hindsight this deal was the best decision? You still see a lot of

09:18pain in Brussels. A lot of voices will still think we should have been tougher.

09:22From a European perspective, it is an agreement that I support. It is an agreement that with all of the

09:30other pressures and issues that we must manage and must be aware of, I believe President van der

09:35Leyen and her team did the best job that was possible. And now we know where we stand. It's

09:41incumbent on all of us, as I said, to manage the risks around us and to do all we can to optimize the

09:48upsides and find the sources of growth. And I can see the efforts of many, if not all,

09:54governments in the European Union at the moment to do so.

09:56From what I hear you're saying, growth is going to come from Europe. It's only Europeans that are

10:02going to have to exponentially increase our growth. It's not going to come externally.

10:06So I see it maybe just slightly differently. I see the responsibility for European growth,

10:12first and foremost, sitting for us here in Europe. And what we can do with the single markets is more

10:19of an ingredient in that in the future than maybe it has been in our past. But external engagement,

10:26trade with the rest of the world will continue to be an indelible part of our future because we're

10:31so trade intensive and we're so open. And that is why, as I said a moment ago, it is the relationship

10:38that we have with the US and the efforts that we have now to restructure, to develop new trade

10:44agreements with the rest of the world and make more of the trading relationships that we have in the

10:49past. That diversity is something that we'll need to make more of. And just lastly, on the

10:54Savings and Investment Union, what progress do you see going into 2026?

10:57I see two areas of progress being made. I see at national level, an acceleration of activity,

11:04which is happening regarding what can be done to support the development of capital markets on a

11:10national level. And I see then at an EU level, I see the work with regard to securitisation

11:17accelerating, potentially being complete. And I see the efforts that are being underway to deal with

11:24issues regarding market infrastructure, being brought forward by the Commission and all of us

11:29working hard on them. But this is a project that from my point of view, as a participant in us, momentum

11:36is very steadily building. But of course, our challenge is, even though we are growing, we're not

11:41growing at the pace or speed that others are. And that is what has to motivate us in our work month after month.

11:48And that's going to change. Well, Pascal Jonaghy, thank you so much for joining us on Year on Year.

11:52It's always great to see you.

11:53Great to see you.

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