00:00There are two important meetings. The Eurogroup is gathering here in Luxembourg, but of course
00:04the focus is very much on the European Central Bank, which has now seen increasing interest
00:09rates by 25 basis points to 2.25 percent. Obviously, this is a scenario in which growth
00:15for the European economy has been dented because of this war, but also you are seeing this
00:20operational for both banks, but also consumer interest rate environment going up. And to
00:26debrief, I'm happy to say we're joined by the head of the Eurogroup, Kyriak Kospiarekakis,
00:31also of course Greek finance minister. Sir, the European Central Bank will increase interest
00:35rates. That is very much what financial markets are expecting. I know you're not going to
00:39comment on the European Central Bank. There's independence, but is that going to make your
00:44life more difficult if we see this higher interest rate environment?
00:47Good morning from Luxembourg. Good morning to your viewers. Let me begin by saying that
00:51as you suggested, the European ministers of finance do not comment upon monetary policy.
00:55We trust the ECB to fulfill its role to anchor inflation expectations, which it must. And
01:01at the same time, what we do know is that we should do fiscal policy. We should implement
01:05policies that do not contradict monetary policy. We need to have orchestrated policies that
01:10optimally support citizens. We know that inflation right now is a challenge. We know that growth
01:14is at the same time a challenge. And we're trying to optimally target our policies to protect
01:18the most vulnerable while also investing in our long-term needs, especially with regards to energy
01:24and energy infrastructural investments.
01:26And you made a critical, crucial point on this. Because the European Central Bank is
01:30increasing interest rates, because inflation once again went up in May, a lot of that is
01:35driven by energy. But your policy should not make it worse, and it should not contradict it.
01:39So on the fiscal side of things, how are you going to help households and Europeans with
01:44those bills, but at the same time, keeping that inflation pressure lower? How is that?
01:49We know that we should be doing effectively three things at once, which makes the situation
01:52even more challenging. On the one hand, you need to support the most vulnerable households
01:56that are most in need. Second, you should be fiscally prudent, because we know that the
02:00fiscal situation, compared to what it was in 2022, is actually now more challenging.
02:05And the third point is that what you do in the long run should fit what you do in the
02:10short
02:10run. And when we invest in energy, we're effectively investing in the long run sovereignty, capabilities
02:16and needs of the European Union as a whole. What do we know? We know that the investments
02:21that we made since 2022 as Europeans enabled us to fill the crisis, as the IMF calculates,
02:27by 12% less, compared to what we would have had had we not made the requisite investments.
02:32So what is the Commission proposing? They are proposing extra fiscal flexibility with regards
02:37to investments in energy infrastructure.
02:40And how is that going to play in? Because you know very well your Italian colleague, representing
02:44the government of Giorgio Meloni, will say today, Italy still wants to see more flexibility
02:49in energy. Whatever they spend on energy, they don't want that included in debt and deficit
02:53calculations. Is the Eurogroup open to that suggestions? Because the Italians are making
02:58it very clear they need help on energy.
03:00Let me make first two points. When we had the escape clause for defence, we knew that investments
03:05in defence are about Europe's freedom. Investments in energy are about Europe's economic
03:10independence. And what do we know? We know that the best social policy is to actually lower
03:15energy prices in the long run, not only doing a short-run fix, a quick fix to address the
03:23current needs that we have in front of us. So in this regard, what the Commission is proposing,
03:27which is some extra flexibility to accommodate for investments in energy, I think constitutes
03:32a very targeted and a very fair approach, a very fair proposal, and this is exactly what
03:36we're going to be discussing today. The Italians, however, continue to say it will not be enough.
03:40This is a very serious situation. Measures should be implemented now in order to stop a recession.
03:45Nonetheless, that recession has not happened. That worst-case scenario of flights who maybe could
03:51not even take off over summer has not happened yet. What is your outlook? How do you see this
03:55European economy performing in a very difficult scenario, but not in a catastrophic scenario yet?
04:01Well, let me put it this way. Our work is to render Europe more resilient. So in this
04:05regard, what do we know? We know that we're not in the worst-case scenario, as you suggested,
04:09but we also know that we're not in the best-case scenario. We're in a challenging situation. So
04:13what has the Commission proposed? Targeted measures, measures that are temporarily targeted and
04:18tailored in order to support the most vulnerable and those in need. At the same time, what do we
04:23know? We know that investments in energy, as I mentioned before, effectively make the European Union,
04:28the Energy Union, more resilient, and at the end of the day, they constitute the most productive and
04:33the most effective social policy. So we're going to be discussing this today.
04:36But you don't see a recession happening. You don't see a big economic downturn. You think
04:40the worst has been avoided. Well, let me put it this way. We are
04:43closely monitoring the situation. We know that the numbers have been adapted. They have been updated.
04:47Inflation upwards, growth downwards. Are we in a stagflationary tendency? We are, but we're not in
04:53stagflation. So we're going to monitor the situation. The Commission overall is adapting its
04:58proposals contextually. So the situation has changed. And this is why the Commission has
05:01proposed this extra fiscal flexibility with regards to energy investments. So we're going
05:06to monitor. We're going to discuss. There are different viewpoints at the table. I've said this
05:09publicly. And we're going to try to do our best. And just a final minute on this matter. The head
05:14of the IMF will also be participating in the talks. The IMF, Kristalina Gurgeva, she has said she's in
05:19favor of common debt for common European projects. That would be good for Europe. How's that conversation
05:24going along? Is that something you can support more joint borrowing? Let me put it this way.
05:28We already had the IMF join our discussions. I mentioned before this calculation about 12%
05:33less impact because of what we did. This is an IMF calculation with regards to energy. I had the
05:38privilege of meeting Kristalina Gurgeva yesterday with my other hat, that of the Greek Minister of
05:43Finance. And if I may make a quick point, I think it's quite symbolic to see my country, Greece,
05:48from a country that was a participant in an IMF-led program to now be a contributor of technical
05:53know-how for the Southeastern Europe Technical Assistance Center in the region.
05:57So the work of the IMF, I think, is quite pertinent to support the work that we as European
06:01Ministers of Finance are trying to do. We're going to be discussing all of those issues at the Euro
06:06Group. Obviously, as you know, my work as President of the Euro Group is to speak about
06:10what we all agree upon at the same time. On that very topic, there are different viewpoints,
06:14but certainly there isn't an issue that we're not planning to discuss.
06:17Well, Minister, thank you so much. And head of the Euro Group, of course,
06:20his job is to find consensus. But at this point, Maven, you alluded to this,
06:24budget talks will begin. The conversation about Euro bonds certainly has not died.
06:28It's a difficult job to find consensus on this matter.
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