Additional considerations on the Euro area economic policy 2023

EESC opinion: Additional considerations on the Euro area economic policy 2023

   Key points

The EESC:

  • recommends that ECB monetary policy remains constantly adapted to economic data in order to achieve the inflation target of 2% in the medium term and on a solid basis, while managing the risk of overtightening;
  • supports the coordination of the Member States' fiscal policies with the monetary policy of the ECB in order to achieve a monetary policy that is effectively able to tame inflation within a coherent approach;
  • underlines that the EU should intensify its path towards a wider diversification of energy supply;
  • is concerned about high inflation, and in particular about inflation in the food sector, where competition does not always seem vigorous in some Member States;
  • observes that the gradual phasing out of the temporary frameworks regarding State Aid, already planned by the Commission, should lead to more targeted measures with improved design, efficiency and affordability in order to preserve the consolidation of the internal market;
  • stresses that fiscal policies should be appropriately differentiated across the Member States, given the different situations of their public finances;
  • points out that targeted fiscal measures are needed to support vulnerable people and companies. Sufficient levels of investment in research, development and innovation to increase productivity and drive the growth of the real economy, as well as to maintain competitiveness, should also be duly supported;
  • stresses that for a reformed economic governance framework to be successful, ownership of the process by the Member States and the effectiveness of the new rules will be decisive;
  • welcomes the relative resilience of the labour market shown by the most recent data, even though youth unemployment is significant in several Member States and real wages are facing some serious pressure;
  • believes that the social partners and governments should negotiate and agree on national income pacts to reduce inflation without undermining investment and growth, and that these pacts should be accompanied by targeted measures to support vulnerable sections of the population;
  • believes that the efficient implementation of the Recovery and Resilience Facility (RRF) will remain crucial in the remaining period, and calls for a thorough evaluation of the impact of the funded projects to ensure that they align with long-term goals and are actually able to contribute to recovery and resilience;
  • encourages both the ECB and national governments to roll out alternative support measures and appropriate initiatives, other than interest rates changes, to put inflation on a downward path as soon as possible;
  • expresses its apprehension about the state of the euro-area economy after the September ECB interest rate increases, pointing out that, based on the current economic fundamentals, further increases should be avoided. The challenge now for all policy-makers becomes determining how soon it will be possible to put interest rates on a downward path.