Commissioner, you are visiting Berlin this Monday. Who are you talking to and for what reason?
First and foremost, of course, with the Federal Minister of Finance, but also with the Economics Minister and the Chancellery Minister. The topics are roughly the same: the economic consequences of the war in Ukraine, the reform of the Stability and Growth Pact. Above all, we must work on making Europe more competitive.
Competitiveness is a colorful term and can mean many things.
Yes, in fact we are dealing with several challenges at the same time, some of which overlap. First, we must protect our economy from the consequences of war. This crisis hits mainly Europe and the developing countries, not so much the USA and China.
Are you talking about energy prices?
I agree. So far we have coped exceptionally well with the energy crisis, also because we were lucky with the mild winter. Gas prices are back at 60 euros per megawatt hour. They used to be three, four, five times as high. But that’s still three times what Americans are paying and it’s going to stay that way for another five or ten years, depending on how fast we expand renewables.
And the other challenges?
Secondly, our companies have to deal with what we in Brussels call the “double transformation”, i.e. digitization and the “green turn”. Thirdly, we have to consider – this is related – how we react to the American “Inflation Reduction Act”. Fourth, we must maintain European competitive advantages over China or the US. When I met the representatives of the industry associations from Germany, France and Italy late last year, that was their main concern, not so much the IRA. And finally, we have to take into account that not every Member State can do all of this on its own.
In short: you are calling for new EU debt.
That’s what it will come down to, yes. I had already emphasized this in a guest article in your newspaper in October. But we must not take the third step before the first.
What does that mean?
We are in the process of tackling the problem in a structured way. It is clear that we will make targeted adjustments to the state aid rules in order to enable the Member States to receive more aid. But, and this is very important, we will not abolish them. That would be a historical mistake. Then we have to see which EU funds that are already available we can use to increase competitiveness. Then we have to identify the sectors that are particularly in need of and worthy of support, especially with a view to the double transformation. Then there is the question of how we can reduce national differences in competitiveness. And only then does it come down to financing – in the medium term via a sovereignty fund, in the short term through an interim solution.
Which instruments are you thinking of?
First of all, it is about using existing resources. There is a reallocation of budget funds to think about, to the European Investment Bank, to funds from our Repower EU program, also to money from the Corona development fund.
There is actually still plenty of money left from the Corona fund.
Yes, about 200 billion euros have not yet been called. However, this amount will be significantly reduced in the course of the first half of 2023. I expect it to be halved because the projects have now been defined and, on the other hand, the financing conditions for the states on the capital market are deteriorating. This makes it more attractive for them to access the loans from the fund.
What do you estimate, how much new public money does the EU need? Your colleague Thierry Breton speaks of a fund of 350 billion euros.
Yes, this is being discussed. We must avoid the impression – also as a signal to the financial markets – that we are just moving existing money back and forth. We need new money.
Council President Charles Michel accuses the Commission of being too slow and has itself pushed ahead with a push for new debt.
Oh, of course we could be faster. And we have to be quick. But Mr Michel probably also knows that there are different ideas about this in the Member States, and experience has shown that it will take some time before a compromise is reached. We are now in the middle of a process like the one that existed before the Corona Fund was agreed. We were very quick there and made very good decisions in the end.
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