08 November 2023

Remarks by Paschal Donohoe following the Eurogroup meeting of 8 November 2023 - main results

30th anniversary of the entry into force of the Maastricht Treaty. ...The Single Resolution Fund, which is a key pillar of our EU Crisis Management toolkit, has now reached an important milestone as it has now reached its target capacity.

I began the Eurogroup meeting by recalling that it is now the 30th anniversary of the entry into force of the Maastricht Treaty. Leaders 30 years ago laid down concepts and The Single Resolution Fund, which is a key pillar of our EU Crisis Management toolkit, has now reached an important milestone as it has now reached its target capacity.approaches that we have looked to build upon in the three decades since then. I used that framework to look at where we are now with regard to economic policy, our work on the banking union and capital markets, and then, of course, the work that is underway now with regard to economic governance.

That treaty marked an obviously fundamental moment in European integration - it laid the way for a single currency, it established the European Central Bank, and it laid down the early stage in the rules that are now such a big part of our monetary union. It has also, over those 30 years, been a reminder to us that the course of economic and monetary union is, to put it mildly, not a long and tranquil river. It's a permanent dialogue with lots of change, lots of evolution, and lots of challenges. And of course our ability to deal with all of that is our collective will and our respect for our common engagement. And that is why the Eurogroup and the work that we do each month is so important to the economic and monetary union.

We therefore began our meeting with an update on the economic situation and the risks that we see, particularly from developments that are taking place elsewhere in the world. The incoming data demonstrates that headline inflation is coming down and that our labour markets continue to be resilient. But we have also seen a confirmation of some loss of momentum in our economy and we will be receiving from the Commission their updated view on these indicators when they issue their Autumn forecast. All that being said, the euro area continues to remain resilient and there is no reason to expect a deep or a protracted recession.

The Commission will also be issuing its opinions on our draft budgets for next year. We'll be looking at these in detail in our next meeting when we aim to issue a Eurogroup statement, and our discussion today was a good opportunity to get ready for that.

Building on this, we then had a broad discussion on the key competitiveness challenges that will forge future living standards in the euro area. We are aware of all of the factors that influence our productivity, that influence investment, that influence innovation within the euro area economy. The Commission gave us an assessment and a very thoughtful paper on where we stand on our current levels of competitiveness, and where we stand with regard to the policy areas that will influence our future levels of competitiveness. As a discussion takes place across the European Union on the level of competitiveness that we enjoy within the global economy, how it is changing, and what needs to be done, I'm committed to making sure the Eurogroup and finance ministers have a voice in that debate and that their views regarding what we need to do in the future for our economies is made clear and emphasised.

After this, we moved to the Eurogroup in banking union format. We welcomed our Bulgarian colleague and we also welcomed the chairs of the Single Resolution Mechanism and the Single Supervisory Mechanism. They presented to us the reports that we receive twice a year on their supervisory and resolution activities.

We then held a very open discussion on the challenges ahead for our banking sector and how the institutions intend to address them. We acknowledged the good health of our banking and financial system, which has proved its resilience in the face of several shocks as they have boosted their capital and their liquidity position. This is a result of the decisive action that has been taken at the European level. 

We also recognised the new challenges that could await, given what is happening across the world, changes in our rate of economic growth and the consequences of higher interest rates. We also discussed the implications of these developments for the profitability of banks.

So looking ahead, all of this was a reminder to us of the importance of dealing with unfinished and really important business. First, ensuring that the ESM can provide the liquidity backstop to the Single Resolution Fund as planned in the reforms that we agreed to, and second, striking a final agreement on the reform of the crisis management framework, as we agreed in June 2022. The legislation from that agreement, of course, is now being debated under the Spanish presidency.

We then wrapped up our meeting in inclusive format with all 27 member states present. We discussed the future of European capital and financial markets. This follows the approach that we agreed back in May, where we are now exploring drivers of economic progress and possible solutions and steps that can be taken to develop our capital markets. Our aim is to reach a common view on those steps to invite the Commission to take action on them in the time ahead. In order to inform this discussion, we've now had a range of private sector guests. Today we welcomed two more. We had Trond Grande, the deputy CEO of the Norwegian Government Pension Fund, presenting their investment strategy of what is the largest fund of its kind in the world. And then we had Ronald Wuijster, CEO of APG Asset Management, who explained the Dutch pension funds' role and how they channel household savings into productive investment. They gave us real, tangible, practical ideas about how capital markets can be attractive, how they can play a bigger role with regard to future growth and how they can be more attractive for citizens investing their savings into, for example, a greener economy in the decades ahead. We all know there's a massive potential to boost retail and institutional investment within the European Union, and the Commission already has really important initiatives underway with regard to this. We want to build on that work and look at how we can take it to the next level.

So next month we're going to be completing this phase of our work and after that, we'll move on to the third and final phase of our work on capital and financial markets, where we're able to reach agreement amongst ministers on those areas upon which we would invite further action.

Main results

Eurogroup

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