At Eurogroup meetings, we have had a number of discussions on energy prices and inflation to which Finance Ministers from many Member States have contributed. The outcomes of Eurogroup discussions are communicated through the post Eurogroup press conferences and summing-up letters at:
www.consilium.europa.eu/en/council-eu/eurogroup/eurogroup-documents-register/.
While the euro area has performed extremely well and the outlook is positive, we are very alert to the recent rise in prices, much of which reflects energy price developments. In fact, I invited the Director of the EU Agency for the Coordination of Energy Regulators (ACER), Christian Zinglersen, into our October Eurogroup meeting to discuss energy prices. At our most recent meeting in December, it is still firmly our view that the rise in prices is temporary and that inflation will ease in 2022.
In relation to the Government’s response to rising energy prices, in Budget 2022 the Minster for Public Expenditure and Reform announced a range of measures to tackle the rise in prices. These measures included increases to the fuel allowance as well as core welfare rates, which were also designed to counteract the impact of the carbon tax on low income households. The specific measures were:
- An increase to the Qualified Child Payment of €2 per week for children under 12 and €3 per week for children over 12, which will protect low income families and reduce child poverty.
- An increase in the Living Alone Allowance of €3 per week as people living alone are likely to have higher energy needs than average.
- An increase to the Fuel Allowance of €5 per week to compensate a broad range of lower income households. This is combined with a broadening of the threshold for Fuel Allowance eligibility and an increase in the income allowed for the means test that is applied to applicants.
- An increase in the income threshold for the Working Family Payment of €10 per week.
The total cost of these interventions is projected at €146 million in 2022. Cumulatively, these measures will protect the most vulnerable but I would re-iterate the views of the European Institutions and the International Monetary Fund that the recent spike in prices is transitory.
