Business cycles | The government’s top five will meet next week to discuss the EU’s deteriorating economy

The government there is scheduled to be a broad discussion about the EU’s economy, which may be drifting into serious problems, during the fall.

According to information from Helsingin Sanomat, the first discussion will take place when the Prime Minister Sanna Marin (sd) will convene a five-party meeting next week, consisting of chairmen of the governing parties.

It is planned to invite several initiators to the meeting.

Viisiko will likely hear from representatives other than the Bank of Finland and the Ministry of Finance, whose views the government hears regularly anyway.

People have reportedly not been selected yet. According to HS, at least the chairman of the EU Economic and Financial Committee Tuomas Saarenheimon the name has been displayed.

The purpose of the meeting is not to make economic policy outlines or decisions, but rather to get different views on the EU’s economic outlook and on what means, for example, recession and inflation make sense.

Marin also plans to invite a so-called evening school in November to discuss extensively the future of the EU and the EU’s economic policy. No decisions are made in the evening school, and in addition to the board, the chairmen of the parliamentary groups of the governing parties often participate in it.

Economists are invited to the evening school to think about, among other things, how big problems the rise in prices that started with Russia’s war of aggression might cause for the EU economy.

Government sources describe that the purpose of the events is to focus on thinking about the options for the EU economy without acute decision-making pressure.

In discussions we will also discuss the actions of the European Central Bank, because the role of the central bank is to maintain the stability of the price level, i.e. maintain the value of the euro.

The European Central Bank has already raised its key interest rates twice this year to slow down inflation. By raising interest rates, it aims to return the increase in prices to its target, i.e. around two percent in the medium term.

European the central bank’s activities sparked an exceptionally passionate discussion in various media when Prime Minister Marin shared one quote without accompanying words on Twitter.

The entire tweet was as follows: “There is something seriously wrong with the prevailing monetary policy ideas when central banks protect their credibility by driving economies into recession.”

The quote is from a researcher at the University of Helsinki Antti Ronkainen Suomen Kuvalehti from the published article.

Read more: Marin talked himself into a bag with his central bank statements

Marin’s the phrase shared refers to interest rate purchases by central banks, with which central banks try to curb inflation, i.e. the rise in consumer prices. Ronkainen reflects on the problem where the central bank’s interest rate hikes worsen an economy that is already plunging into recession.

Many interpreted that Marin does not understand central bank policy and as a politician he should not intervene in the activities of an independent central bank.

Marin said afterwards that he did not criticize the actions of the central banks. In his opinion, politicians are also allowed to participate in the debate on the European economy and central bank policy.

Marin’s tweet hit a sensitive spot, as Europe may be facing a time when central banks will be harshly criticized as they raise interest rates while unemployment increases and Europe’s economic problems deepen.

Read more: Sanna Marini’s tweet questioned central banks’ interest rate hikes – the European economy may soon experience the hardest blow since World War II.

The interest rate weapon of the central banks is quite harsh in today’s problems, the main reason of which is the increase in the cost of energy due to the war. Energy has become more expensive since Russia invaded Ukraine.

European the central bank’s ability to influence the price of energy with interest rates is very limited.

In addition, there are ultra-indebted countries in the EU, such as Italy, whose debt management capacity is weakened by the increase in interest rates.

However, the rise in prices has already spread widely. Long and uncontrolled inflation could be more destructive to the economy in the medium term than a recession during which inflation can be brought under control.

Europe is therefore facing an exceptionally difficult problem.

The aim of the government’s autumn discussions is to get more information about what may lie ahead and to think in advance about what kind of policy Finland should pursue before even bigger economic problems than the current ones are in our laps.

Read more: Interest rate-raising central banks and stimulus politicians drifted on a collision course – At worst, a disaster is ahead.