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After more than a year of economic pain, Europe's recovery is stepping up a gear.
Last week, the European Commission upgraded the spring economic forecast. We projected growth of 4.2% for the EU economy this year, and 4.4% growth next year.
Even though growth rates are likely to vary, all EU countries should see their economies return to pre-crisis levels by the end of 2022.
Fiscal policy should remain supportive both this year and next, as the minister already outlined - and also based on the spring economic forecast, we can confirm our approach that we would keep the general escape clause activated in 2022 and but no longer as of 2023.
We used this Ecofin to have more strategic, more conceptual discussions about the risks and challenges that lie ahead in the context of the economic recovery.
Like other crises before, this one has left some unwelcome legacies: higher public and private debt, negative impact on social and labour markets, just to give some examples.
Maintaining extensive liquidity support for too long would carry budgetary risks in itself.
But on the other hand, we should also avoid sudden, premature or uncoordinated removal of temporary support measures.
Europe's banks, along with the entire financial sector, will play an
important role in ensuring a successful and uniform economic recovery.
So far, the strong EU and national policy response has kept company insolvencies at bay and non-performing loans relatively low on banks' balance sheets.
We will do our best to keep things that way.
But it will be an area to watch closely.
And we will need to ensure the right balance as we coordinate between different crisis and recovery measures.
This is why the Recovery and Resilience Facility is so important.
It will lead us to solid and safer ground as we enter the post-crisis phase. Now we need to put it in place and get the funds flowing.
The watchword for the coming months will be implementation.
So far, we have received 18 plans, and more should arrive soon.
Our aim is to see RRF funds flowing already in the summer. They will provide a massive growth stimulus to Europe's economy, while not adding to national debts and deficits.
What we see so far in the plans looks quite promising:
We are now in contact with Member States that have submitted plans to go over the details so that we can finalise the assessments.
We know Member States are now anxious to receive the pre-financing as fast as possible.
We are working from the European Commission side as fast as we can. But these are complex assessments.
We have to get it right. The plans have to stand the test of time and lead to a positive overhaul of our economies.
We have two months and we will try to accelerate things a bit.
But it's also worth remembering that Member States – the Council - also need one month for their assessment.
Now let me say a few words about another important discussion we had today: on the future of environmental taxation.
This will play an important role in our journey to a climate-neutral Europe as part of the European Green Deal.
It reflects our commitment to tackling climate change. And it will contribute to long-term sustainable growth as part of the recovery.
We all agreed on some key points, that green taxation can:
In July, the Commission intends to overhaul the relevant EU climate and energy legislation aligned with our more ambitious 55% emission reduction target for 2030.
So we will put forward the so-called “Fit for 55” package.
This will include a proposal for revising our outdated Energy Taxation Directive and a proposal for a Carbon Border Adjustment Mechanism – or CBAM.
The CBAM - as the minister already explained - is an environmental measure. It will address the risk of carbon leakage by equalising the prices of carbon paid for domestic and imported products. It should incentivise greater use of carbon pricing globally - and that would be a good way to fight climate change.
Of course, it's not going to be easy.
But we are confident that we can get a consensus on a targeted CBAM proposal that is gradual over time, and WTO compliant. And we will obviously also strive to make it efficient.
There is also broad support for a revision of our Energy Taxation Directive and an acknowledgement that we will need to consider including sectors such as aviation and maritime.