15 January 2024

Remarks by Paschal Donohoe following the Eurogroup meeting of 15 January 2024

We are within the Eurogroup working on many of the economic aspects of this - how we can strengthen our European capital markets, how we can improve our competitiveness and security, how we can bring the single currency into the digital age,...

Let me begin by acknowledging that this year we celebrate 25 years since the launch of the euro. These moments are a natural moment of stocktake, and across a quarter of a century, there have been many different questions posed, including about the future of the euro itself. But each time we managed to come up strong and with the right answers. And today we face new challenges that countries can't address alone. This is the role and the contemporary rationale of the European Union, how we use interdependence as a source of strength.

We are within the Eurogroup working on many of the economic aspects of this - how we can strengthen our European capital markets, how we can improve our competitiveness and security, how we can bring the single currency into the digital age, by preparing the foundations for a potential digital euro that will complement cash and not replace it.

Our Eurogroup work programme for the year focuses on these issues, and I'll speak on that in detail in a few more moments. But before I do that, just a quick update on our discussion today.

The meeting began with an assessment of the latest economic developments confronting the euro area, based on the IMF assessment that we received. We expect subdued activity after the many shocks that hit us over the past couple of years - and that's what we are clearly seeing in the recent forecasts. But there are some real bright spots too. The labour market remains strong with record-low unemployment. The disinflation process is well underway and the economic sentiment improved overall last month. And while the industrial production and PMI numbers are patchy, what we are seeing is very far from doom and gloom, right across the board. And after a long and very important set of debates, we're also on the cusp of a new and improved set of fiscal rules.

So I would see the glass as very much half full, and the IMF recognised our strong policy response and resilience in the face of some unique shocks. Based on the engagement that we had today, I am reassured again that there is a broad agreement within the Eurogroup on the central policy conclusions and in particular, regarding what we need to do on budget policy for 2024 and beyond.

So with that said, we then moved on to agree on the recommendations on the economic policy for the euro area for 2024. That will be discussed and agreed in Ecofin tomorrow. These recommendations set out five priority policy areas: (1) coordination of fiscal policies, (2) sustaining high levels of public investment, (3) supporting wage developments that mitigate purchasing power losses, while also taking into account the need to be careful with regard to risks to inflation and competitiveness, (4) strengthening the single market, (5) and the work we need to do to maintain macro-financial stability.

From this, we moved on to the longer-term performance of the euro area under our work stream on the competitiveness of the euro area. To get this discussion continuing to flow, we welcomed Christian Zinglersen of the EU Agency for the Cooperation of Energy Regulators, and Jeromin Zettelmeyer, director of Bruegel, who both gave us their perspectives on the future development of energy markets across the world and in Europe, building on a paper that was developed by the Commission. This reminds us that we'll continue to see energy prices that are high for some time. We discussed the consequences of this in terms of competitiveness and what this means for economic policy, but also policy across many other areas of the European Union....

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