Meeting in an enlarged format, euro area leaders will exchange views on Friday 24 June on the macroeconomic situation in Europe as the Russian invasion of Ukraine fuels inflationary pressures and has a negative impact on economic growth, notably due to a reduction in Russian gas supplies.
“The current situation requires an in-depth discussion” said European Council President Charles Michel in his letter of invitation to the EU27.
On Friday, ECB President Christine Lagarde is expected to explain the decisions taken aiming to gradually normalise monetary policy (see EUROPE 12968/1). She could, in camera, tell leaders about the work of the monetary institute in developing an ‘anti-fragmentation’ tool to combat excessive disparities in the interest rates applied to the debts of euro area countries (see EUROPE 12975/16).
Both the European Commission and the ECB are forecasting a slowdown in European growth to 2.7% and 2.8% respectively and of inflation to 6.1% and 6.8% respectively in 2022.
During the discussion, several leaders may mention the creation of a European instrument to help Europeans cope with soaring energy prices. The Italian Prime Minister, Mario Draghi, is calling for an instrument inspired by the SURE system of partial unemployment aid set up to deal with the Covid-19 pandemic. The European Commission has also been mandated to study the appropriateness of setting a ceiling on energy prices.
Some countries are “pushing for stronger intervention measures”, a European source confirmed on Wednesday 22 June.
But a majority of Member States remain cautious about setting energy price ceilings, which could create new distortions in the internal energy market.
In addition, the president of the Eurogroup, Paschal Donohoe, will present to the leaders the work of the euro area ministers in the first half of 2022 (see EUROPE 12976/22). The Eurogroup advocates a broadly neutral fiscal stance at the euro area level and asks States to target their fiscal support measures to sectors in difficulty. It failed to agree on a work programme to complete the banking union.
Croatia. Euro area leaders will congratulate Croatia, which will become the 20th country to adopt the single currency in January 2023 (see EUROPE 12973/2 and 12963/1).
This shows that “the machinery is still working”, said a second diplomat.
Taxation. The minimum taxation of multinationals is not on the agenda of the Euro Summit. However, after the recent failure of the Ecofin Council to adopt the directive transposing the OECD agreement in this area (see other news and EUROPE 12974/8), a solution could be sought with Hungary, which had vetoed the matter.
This is “one of the expected surprises” of the summit, noted the first source. (Original version in French by Mathieu Bion with the editorial staff)