Euro area finance ministers will review the macroeconomic situation in the euro area on Monday 13 February in light of recent developments in energy markets, the labour market and the repercussions of Russia’s military aggression in Ukraine.
No political decision or specific statement is expected following this discussion, but the aim is to feed into the ongoing debate with updates on the latest data, looking ahead to a statement on the fiscal policy strategy for 2024 to be adopted at the Eurogroup meeting in March.
On Monday, the Director of the Agency for the Cooperation of Energy Regulators (ACER), Christian Zinglersen, will give an overview of the state of the energy markets in the EU. This is marked by a sharp drop in gas prices at the end of 2022 compared to the peak reached last summer, thanks in particular to still abundant domestic reserves linked to a mild winter and the introduction of a European cap on gas prices.
The aim is to provide ministers with the keys to justify at national level the budgetary need to target to the maximum extent possible the temporary emergency measures that euro area countries have taken to support households and businesses most affected by the surge in energy prices.
“It is important that countries use this window of opportunity to make sure measures are more targeted and are phased out in line with the pressure in the market”, an EU source said on Thursday 9 February, expecting a “lively” debate between ministers. According to her, the ministers are almost all convinced of the direction to take, the challenge being “making it politically possible” and “communicating it to the electorate” through arguments provided by the Eurogroup and the peer pressure it exerts.
In December, euro area ministers pledged to “phase out” emergency energy measures when energy prices fall (see EUROPE 13077/14).
On Friday, Russia, which is subject to an EU embargo and a Western price cap, announced a unilateral cut in oil production to maintain world prices.
In light of the first growth figures for the fourth quarter of 2022, the euro area could avoid a contraction in early 2023, even if growth will remain very moderate this year due to inflation that is still too high (8.5% in January) and the high level of uncertainty linked to the war in Ukraine. The historically low level of unemployment (6.6% at the end of 2022) continues to be surprisingly resilient, although a gradual rise is expected during 2023.
“On balance, fears of stagflation are not coming to pass”, the source said.
The European Commission will present its winter economic forecasts on Monday morning, which will help fuel the discussions. Similarly, the ECB will explain its recent monetary policy decisions, such as the 0.50% increase in key interest rates in February and the announcement of a further identical increase in March (see EUROPE 13113/4). (Original version in French by Mathieu Bion)