Euro area finance ministers will take stock of the macroeconomic situation in the euro area, in an attempt to assess the economic impact of the Russian invasion of Ukraine, on Monday 4 April in Luxembourg. They will also discuss the banking union, the digital euro project and the property markets.
One month after the outbreak of war in Ukraine, soaring energy prices continue to force Member States to take emergency measures for consumers and businesses. It is the main driver of inflation, calculated at 5.9% in February, although the rise in prices is now sustained by a broader base, including food prices.
This situation is forcing the European Central Bank to commit to normalising its monetary policy by ending the ‘PEPP’ securities repurchase operation, launched to deal with the Covid-19 pandemic, on Thursday, and by no longer ruling out a rise in its key rates by the end of 2022.
In this context, and even if the evolution of geopolitical tensions at the EU’s borders, which is disrupting supply chains, is difficult to anticipate, growth in 2022 in the euro area will not be as anticipated at the beginning of the year (4.0% for the European Commission, 3.7% for the ECB).
“The euro area is still likely to remain resilient, but growth is likely to be significantly lower than expected”, a European source said on Thursday 31 March. According to this source, the knock-on effect of the economic rebound in 2021 will carry over to 2022 and maintain positive annual growth, although a crash in the short term cannot be ruled out.
The question of the euro area’s fiscal stance for 2023 will be raised again in May, when the European Commission presents its socioeconomic policy proposals for the Member States.
Banking Union. The ministers will be briefed on the functioning of the banking union in the euro area with the participation of the chair of the Single Supervisory Board, Andrea Enria, in charge of supervising banking groups (see other news), and the chair of the Single Resolution Board, Elke König, in charge of conducting the resolution of large failing banks (see EUROPE 12922/15).
The Eurogroup will try to reach a political agreement by June on a detailed work programme leading to the completion of the banking union (see EUROPE 12911/18). Its chair, Paschal Donohoe, is expected to present the programme at an extraordinary ministerial meeting in early May.
Digital euro. The Eurogroup will continue its regular discussions on the creation of a digital euro, a project led by the ECB. The privacy of future users will be a central concern.
Subsequent ministerial discussions will focus on the impact of the digital euro on the financial landscape and the role of actors such as national central banks and the private sector.
Real estate markets. On Monday, the finance ministers will also discuss the development of the housing markets in the euro area. Although these markets have their own local circumstances, the underlying trend, excluding the financial crisis of 2018, is still upwards, with an acceleration linked to the Covid-19 pandemic. (Original version in French by Mathieu Bion)