SAINT-JACQUES-DE-COMPOSTELLE (Reuters) – Euro zone finance ministers discussed on Friday how to define their fiscal policy for next year, in order to help the European Central Bank (ECB) curb the inflation, while tackling the problem of slowing economic growth, euro zone officials said on Friday.
Finance ministers from the 20 countries sharing the euro are meeting in Santiago de Compostela, Spain, to discuss the latest economic forecasts from the European Commission, which at the start of the week significantly downgraded its projections for this year and next year.
At the same time, the ECB raised interest rates again on Thursday in the face of persistent inflationary pressures.
“It will be up to fiscal policy to consider how we can help reduce inflation while supporting our societies, while the cost of living remains a major challenge,” said meeting chair Paschal Donohoe.
“It is in everyone’s interest to bring inflation down. If inflation stays too high for too long, households and businesses will become poorer for longer. Fiscal policy and monetary policy must play their part. This is a complex challenge,” he said.
This discussion comes as all euro zone countries must submit their draft budget for 2024 to the European Commission, responsible for verifying their compliance with the budgetary rules of the European Union.
“Our policies must avoid undermining what the central bank has decided,” Paolo Gentiloni, European Commissioner for the Economy, said ahead of the meeting.
“This is a difficult balance to strike, but we also need to preserve fiscal space for investment,” he added.
French Finance Minister Bruno le Maire stressed that France is committed to cleaning up public finances and reducing debt, but that Europe also needs higher growth.
“We should devote all our time and energy to thinking about what steps to take to increase growth in Europe. This means we need a good balance between healthy public finances and debt reduction, a on the one hand, and innovation, investment and the fight against climate change, on the other,” he said.
(Reporting Jan Strupczewski; with contributions from Maria Martinez and Belen Carreno; French version Augustin Turpin, edited by Blandine Hénault)
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