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Eurozone Issues

Dáil Éireann Debate, Tuesday - 9 November 2021

Tuesday, 9 November 2021

Questions (270, 271)

Bernard Durkan

Question:

270. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he has had discussions with EU finance ministers in his role as president of the Eurogroup, the various issues which now constitute a threat to economic stability in the future; and if he will make a statement on the matter. [54720/21]

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Bernard Durkan

Question:

271. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he continues to influence thinking in the Eurogroup with the view to ensuring a united effort to challenge potential threats to European economies; and if he will make a statement on the matter. [54721/21]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 270 and 271 together.

As President of the Eurogroup, I have regular discussions with my fellow euro area and EU Finance Minister colleagues, at our monthly meetings and through regular bilateral engagement, both virtual and - now that health restrictions are lifting - physical where possible.

The first priority of the Eurogroup is to agree on economic and fiscal policies to support the recovery and long-term growth, as laid out in the unanimously agreed Work Programme of the Eurogroup [available here: www.consilium.europa.eu/media/49739/eg-20210521-eg-work-programme.pdf].

We regularly take stock of the latest economic situation, including inflation developments throughout the EU, with input from the European Commission and the European Central Bank.

The Eurogroup has facilitated a high degree of coordination of national economic policies across the euro area and the EU, particularly throughout the duration of the pandemic. Finance Ministers signed up to two statements in November 2020 [available here: Eurogroup statement on COVID-19 developments this autumn - Consilium (europa.eu)] and March 2021 [available here: Eurogroup statement on the euro area fiscal policy response to the COVID-19 crisis and the path forward - Consilium (europa.eu) ] agreeing on a united approach to responding to the pandemic. For example, in the March 2021 statement, Ministers agreed that "continued strong coordination of supportive fiscal policy in the euro area remains critical to ensure our economies move into a sustained recovery phase."

As a result, the economic recovery throughout this year has been robust, with recent indicators pointing to strong growth. This momentum reflects our coordinated policy support, successful vaccine roll-out and the boost to reforms and investment now that recovery funding has started to flow. Indeed, growth figures for the third quarter show that the euro area is nearly back to pre-pandemic levels of output.

The pandemic has demonstrated that threats to economic stability cannot always be easily predicted. Nonetheless, the Eurogroup continues to remain alert to the possibility of emerging economic threats.

Such possible threats include rising inflation and higher energy prices. The sharp rebound in global demand and persisting production and transport disruptions has brought elevated rates of inflation. The ECB projects inflation to average 2.2 per cent this year and decline to rates of 1.7 and 1.5 per cent in 2022 and 2023, respectively. Both the Commission and the ECB are confident that elevated rates of inflation are linked to temporary factors, supply-side constraints and the recovery in demand as our economies reopen.

In short, my fellow Finance Ministers and I all agree that supporting a sustainable economic recovery is vital and that we need to continue monitoring inflation and energy price developments and the potential implications of these for our economies. We will also continue to monitor and respond to other issues that may emerge.

Question No. 271 answered with Question No. 270.
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