Eurozone finance ministers call for a joint response to the energy crisis

Finance Minister Paschal Donohoe has insisted that there is “a spirit of solidarity and support” among euro area countries despite rivalries over energy support.

France’s finance minister on Monday called for a more cohesive, Covid-style response to the EU’s energy price crisis to reduce the risk of unfair competition between companies and countries.

His call came just days after Germany announced a massive €200 billion support plan for businesses and households while it continued to resist an EU-wide gas price cap.

Bruno Le Maire, France’s finance minister, said state aid to companies should be “more targeted” to ensure it is focused on those who need it most, such as B. Consumers with high energy consumption and those who are “exposed to competition”.

He called for “close consultations” particularly between the 19 countries using the common currency to ensure fair competition.

“Without consultations, without solidarity, without targeted support for companies, without respect for fair competition, we risk fragmenting the eurozone,” he told journalists on the way to a euro financing ministerial meeting in Luxembourg.

“It is imperative that we respect the conditions for fair competition, that we show our solidarity, that in the end we are just as efficient in the energy crisis as we were in the Covid crisis.”

Most countries in the EU will struggle to keep up with the fiscal firepower of the bloc’s largest economy, which can borrow in the markets at some of the lowest interest rates in the world.

German Finance Minister Christian Lindner said on Monday the €200 billion spending package – which he described as a “comprehensive protective shield” – was “appropriate” to the size of the economy and would be spread over two years.

It is not our intention to fully relieve private households, the economies

“If you compare the size of the German economy and the volume of the comprehensive protective shield, that’s proportionate.

“It is not our intention to stimulate demand in the economy. It is not our intention to fully relieve private households, the economies. It is just a measure to protect the structure, the key structure of our economy.”

The UK was forced to backtrack on a package of tax cuts this week after markets pressured sterling and demanded a higher price to buy UK government bonds.

“The situation in Germany, for example, is different,” said Mr. Lindner. “We stand by sound public finances and sustainable public finance and that is why the market reaction to the decisions we took last week differs from that which the UK has had to recognise.”

EU Vice-President Valdis Dombrovskis said governments “have to be careful” about how much money they inject into the economy to avoid fueling inflation.

“It is clear that we cannot just go ahead with broad fiscal support, so we need to be more focused and cautious, and we also need to make sure the fiscal actions we take are not contradictory [the European Central Bank’s] Aim to return to 2 percent inflation.”

EU Economy Commissioner Paolo Gentiloni echoed Mr Le Maire’s call for “strong coordination” between EU countries and said support measures should be “temporary and targeted”.

Mr Donohoe, chairman of the monthly finance ministers’ meetings, said “coordinating national economic policies is so important”.

https://www.independent.ie/business/budget/eurozone-finance-ministers-call-for-united-response-to-energy-crisis-42036644.html Eurozone finance ministers call for a joint response to the energy crisis

Fry Electronics Team

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