At EU level, through both the ECOFIN and Eurogroup meetings, Ministers work alongside the European Commission and the European Central Bank (ECB) to take stock of the latest economic situation, including the risks and opportunities for European economies in the short to medium-term. I regularly attend these meetings to discuss these developments with my European counterparts and the European Institutions.
At the recent ECOFIN meeting on June 14, there was a general update on the EU economic situation given by the Commission and the ECB but no specific discussion on the expansion of the ECB’s quantitative easing (QE programme).
Momentum in the global economy slowed sharply towards the end of 2018 and the beginning of 2019, amidst a downturn in global manufacturing and trade. Euro Area headline inflation rate in May was 1.2 per cent, down from 1.7 per cent in April 2019. On this basis, average annual Euro Area inflation in the first five months of 2019 is 1.4 per cent. The ECB projects that inflation will remain below target – an inflation rate of below, but close to, 2 per cent – across the forecast horizon, reaching 1.6 per cent in 2021.
The current performance of the global economy is set against a background of increased uncertainty. Risks to economic outlook are significant and include the timing and nature of Brexit, a slowdown in the US and Chinese economies, further intensification of trade tensions, and increasing global indebtedness.
I am aware of the ECB President Mario Draghi’s recent speech (18 June) on twenty years of the ECB’s monetary policy, where he referred to the current economic outlook and downside risks facing the European economy. President Draghi noted that in the absence of a return of inflation to the ECB’s target additional stimulus will be required. Further, that in the coming weeks, the ECB Governing Council will consider how the instruments at their disposal can be adapted commensurate to the severity of the risk to price stability.