Opening remarks by Commissioner Gentiloni at the Eurogroup press conference

Let me begin with some congratulations. First, to Paschal on his re-election as Eurogroup President. Over the last two and a half years he has shown how he was capable to lead this group and to address difficult and challenging situations. He entered the Eurogroup during the pandemic, and has since weathered many crises, contributing to our collective delivery of strong policy responses at a time of unprecedented challenges. And I am convinced that we will continue in this same spirit as we face the challenges ahead.

I would also like to warmly congratulate Pierre on his election as Managing Director of the ESM. Pierre brings tremendous experience to this important role, having been for over 7 years a member of the Eurogroup, where he showed his great ability to build bridges. I am certain we will work very effectively together.

Macroeconomic developments

• On the economic outlook, our economic forecast presented only one month ago is still solid.
•  Survey data are confirming our estimations that we will have a couple of quarters of contraction in winter and that growth will remain subdued next year.
• Second, the external environment, meaning the global situation, looks to be weakening further.
• Third, our forecast for inflation was confirmed by recent data. Our forecast was that inflation was peaking in this end of 2022, but we should be in any case very cautious and aware that decline will only be very gradual next year.
• Fourth, the bright spot in the outlook is that labour markets remain very robust. Of course our strong policy response during the pandemic, including the SURE programme, has contributed to this. But we know that labour markets are reacting to crises with different timings, so we should continue to monitor this.

Draft budgetary plans

• With the documents that we have approved, we have supported a consistent policy mix to support growth, reduce inflationary pressures and address fragmentation risks.
• The euro area fiscal stance is projected to be broadly neutral in 2023, after the expansionary period of 2022. But this very much depends on whether Member States roll back energy-related measures as projected. If existing measures are prolonged or new ones are enacted, deficits could increase markedly more than forecast.
• That is why we encourage Member States to improve the targeting of these measures. We have recommended replacing broad-based price measures with a cost-efficient two-tier energy pricing system that ensures incentives for energy saving. I am happy to see that this proposal was well received by Member States. We had a good discussion on these issues today.
• In the longer term, we need sustained public investments in the green and digital transition, so the fact that all Member States plan to finance such investments, which is very clear in our draft budgetary plans, is most welcome. In other crises we were not able to continue with a high level of public investment, which is instead the case in the present crisis.
• Of course, the only lasting solution to the current crisis is to reduce our dependence on imported fossil fuels. Here we are making significant progress. EU gas demand in November was well below the average of the past five years and diversification of suppliers is well underway. And today, the ban on seaborne shipments of Russian crude enters into force, along with the price cap agreed over the weekend.
• We are also taking forward with determination our dialogue with Washington on the Inflation Reduction Act. And as President von der Leyen underlined yesterday, against the backdrop of increasing global competition for clean tech investments, we are reflecting on how to simplify and adapt our own state aid rules and how to best support our common European industrial policy.

Economic governance review

• Today we also had a first brief exchange on our proposals to reform the economic governance framework, focused on euro area aspects.
• We will have a broader discussion during tomorrow’s ECOFIN. I firmly believe that we must work to achieve a rapid convergence on this reform, at the latest in time for the 2024 budgetary cycle. We are aware that we need to build this consensus, but this was still considered a useful basis by all Member States.

Greece

• Finally, I would like to congratulate Greece. This was the first post-surveillance report for Greece, meaning that the enhanced surveillance period is over. This is a very important result  and excellent news for Greece, the Greek people and the Greek authorities.