Opening address by the Eurogroup President, Paschal Donohoe, at the Dublin Economics Workshop on “Europe, Covid and the Euro”
Retrieved on:
Tuesday, March 23, 2021
Thank you to Ciarn for the kind introduction and to the Dublin Economics Workshop (DEW) for the invitation to speak today.
Key Points:
- Thank you to Ciarn for the kind introduction and to the Dublin Economics Workshop (DEW) for the invitation to speak today.
- I know that the DEW traditionally was hosted in Kenmare, before moving around the country to the likes of Limerick, Galway and Wexford.
- Today of course, due to COVID, we are virtually based in Dublin.
- These virtual events have become part of the new norm as a result of how we have had to adapt to COVID-19.
- I will do so more from my role as President of the Eurogroup rather than as Minister for Finance.
- One of the tenets of my Presidency was built around a vision of an effective, inclusive and transparent Eurogroup.
Eurogroup - Role
- So I hope this, ‘whistle-stop tour’ of how we operate gives you an insight into Eurogroup and its central role in economic and fiscal policy making. All of this is of course underpinned by a very detailed workplan. We have five broad objectives:
- Economic and fiscal policies to support recovery and long-term growth;
- Use of banking union as a source of stability and growth;
- Capital markets union (in terms of the euro area aspects);
- The euro as a digital currency; and
- The international role of the euro.
- So to begin, I was elected President of Eurogroup last July for a two and a half year term.
- This is somewhat different to ECOFINs more legislative role and the latter is also explicitly an EU27 body.
- Eurogroup meetings require considerable preparation to ensure they are centred around relevant political discussions that feature a high level of engagement from Ministers and other informed experts.The sharing of experiences and perspectives plays a key role in engaging Ministers and building up understanding and consensus.
- Every Eurogroup meeting is preceded by numerous calls to my ministerial colleagues and their teams.
- Another key part of my role is to represent Eurogroup at the European Council.
- I presented to our leaders back in December and will do so again later this week on the International Role of the Euro.
- We are also fortunate in that we can expand Eurogroup, into a more inclusive format, depending on the topic at hand.
Euro area response to COVID-19
- As an avid reader, I am very aware of recent commentary on the US fiscal response, relative to the EU.
- However, I think it would be amiss to underestimate what the euro area and the broader EU has done.
- Here too, the response has been extraordinary, in every sense.
- This sent a clear and early signal to the markets that this crisis, and our response to it, would be very different.
- More broadly, the centrepiece of the EU response to date has been Next Generation EU and the Recovery and Resilience Facility (the RRF).
- While just over a year ago, this crisis would have been unimaginable, I think the EUs response to it has also been equally unimaginable.
- These decisions are strengthening our crisis response mechanisms and protecting our citizens.
- While estimates vary, last year close to 8% of GDP was spent supporting our euro area economies, with an additional 19% of GDP in various types of liquidity support.
- Aside from obvious differences between the US and 19 euro area countries, there are inherent differences in our economies, in our social protection systems and in our longer-term objectives.
Eurogroup – budgetary policy orientation
- At Eurogroup we have regular discussions on economic policy.
- There was a feeling that we needed to reaffirm our economic messaging in respect of budgetary policy coordination, not just for this year but also in terms of 2022, so that Member States could prepare budgets that continue the vital economic supports to citizens and businesses.
- Eurogroup will also issue further guidance later in the year as new data and information comes in.
- Over the summer, we will take the economic policy conversation forward, with a particular focus on 2022.
- To date, budgetary policy has proven to be both very effective and agile.
- In fact, this was at the heart of the second part of the statement where we emphasised the need for budgetary policy in time to pivot towards more targeted supports.
Conclusion
- In fact, we face a virus that uses the same qualities we rely on in Europe, to infect; our interconnectedness, our interdependence and our interconnectivity.
- However, there is also a tremendous sense of symmetry in our response.
- Nobody expected a shattering global pandemic but through Eurogroup and beyond we have the political processes and structures in place to support one another.
- We have achieved an unprecedented level of coordination on economic and fiscal matters over the past year.
- All of this is based on the clear goal of supporting citizens, businesses and countries in a time of great need.