On Monday 4 May, finance ministers of the euro area countries will discuss the emergency budgetary measures taken to help vulnerable sectors cope with the surge in energy prices caused by the war in the Middle East.
Meeting in an enlarged format, the Eurogroup will assess the budgetary measures taken by the Member States to help the sectors most affected, while the Commission has just presented a specific framework for State aid linked to the war in the Middle East (see EUROPE 13859/1).
While there is a consensus that these measures must be targeted, temporary and proportionate, it seems that the attempt at coordination stops there. According to the Bruegel think-tank, of the approximately €10 billion of budgetary expenditure made to mitigate the impact of the war on energy bills, almost 80% is not targeted (see EUROPE 13858/22).
The request by Spain and Italy to activate the escape clause of the Stability and Growth Pact could be discussed after the EU27 asked finance ministers to prepare measures by the end of May (see EUROPE 13856/3).
However, on Thursday 30 April, a European diplomat stated that “the situation is not really one that fits the sort of needs and conditions for making use of the escape clauses of the Pact”.
And he added: “Given that during the short history of the new fiscal framework, we’ve already instituted a range of national escape clauses for defence, I don’t think there’s a great deal of appetite to invent another way to circumvent our rules. Particularly given that we know that the fiscal space is limited and that the markets are watching what we are doing”.
An IMF representative will present their assessment of appropriate budgetary measures to ministers.
Finance. Ministers will review the work in progress on digital finance. “The aim of the work stream is to stay on top of the technological developments and payment preferences that are in the process of reshaping our financial system and will have an important impact on the competitiveness of our financial sector”, said the same European diplomat.
At the same time, an in-depth technical analysis of the European regulatory framework is underway to determine the right balance between supporting innovation and preserving financial stability.
A Eurogroup statement on digital finance is expected by the summer.
In addition, Christian Noyer (French) and Jörg Kukies (German) will present the ‘FIVE’ report on ‘scale-up financing’ to ministers.
The ongoing work on the digital euro is expected to be on the agenda for the May Eurogroup meeting.
Banks. The Eurogroup will take stock of banking union in the euro area, in the presence of the Chairs of the Single Supervisory Board (SSB) and the Single Resolution Board (SRB). It will examine the issue of consolidation in the banking sector, as the German government refuses to allow the Italian group UniCredit to take control of the German bank Commerzbank.
This discussion is part of the ongoing work to provide input to the thinking of the Commission, which, in July, will present a communication on the competitiveness of the EU banking sector (see EUROPE 13852/17, 13850/19). (Original version in French by Mathieu Bion with Bernard Denuit)