Debate: European Central Bank - annual report
Date: WEDNESDAY, 15 FEBRUARY 2023
Speaker: Mairead McGuinness
Language: EN

My thanks to the rapporteur, Mr Andreson, for your work and indeed your colleagues on the committee. And I think it’s also fair to say thank you to the chair of the ECON Committee, Irene Tinagli, who is a very good collaborator. My appreciation to all your colleagues.  Croatia joining the euro, the 20th member. A huge achievement for Croatia, but a European milestone also. The Commission shares the report’s deep concerns about Russia’s invasion of Ukraine and its consequences. The energy crisis led to a slowdown of economic activity, but our economies are proving to be a little bit more resilient than we might have expected. This is also evidenced by the recent Commission forecasts. We, as a Commission, respect the ECB’s independence in the conduct of monetary policy. We fully acknowledge that the ECB has taken decisive actions to tame inflationary pressures and ensure that inflation expectations remain well anchored, and the ECB’s decision to bring inflation down to close to the target of 2%, avoiding a wage price spiral.  The draft report touches on the coordination of monetary, fiscal and structural policies, which is a topical issue. As monetary policy tightens, ensuring a consistent policy mix remains critical. Expansive monetary and fiscal policies played a huge stabilisation role and reinforced each other during the economic downturn caused by the pandemic crisis.  Now that our economies are being challenged by strong and persistent inflationary pressures, fiscal policy should avoid fuelling inflationary pressures. A further expansionary stance is not warranted. As the ongoing tightening of monetary policy reduces the available fiscal space, we should have a prudent fiscal policy. And, therefore, the euro area Member States should coordinate their fiscal policies to preserve debt sustainability and raise potential growth in a sustainable manner which would facilitate the task of monetary policy, bringing inflation back to 2%. The Commission has strongly advocated a better targeting of the fiscal measures to cushion the impact of high energy prices on vulnerable households and companies. As energy prices have declined substantially, this becomes more relevant.  With the general escape clause being deactivated as of next year, it will be important to make swift progress with the discussions on the possible revision of the EU fiscal framework. A credible framework will contribute to safeguarding fiscal sustainability and promoting sustainable growth through investment and reforms. The Commission put forward orientations for a reform last year. We already had good discussions with the European Parliament and are also discussing this with Member States. On the basis of these discussions, the Commission will consider tabling legislative proposals.  Your report stresses the importance of addressing climate change. We welcome the ECB’s efforts to incorporate climate change considerations in its monetary policy framework within its price stability mandate. This complements the actions taken by the Commission and Member States to address climate change and promote green investments, including, for instance, through the Recovery and Resilience Facility.  The implementation of the RRF and REPowerEU is all the more important with the new green industrial plan. Policy objectives enshrined in the REPowerEU Regulation explicitly include aims that are directly relevant to the industrial transition to climate neutrality, including industrial decarbonisation; the development of renewable and fossil-free hydrogen; green skills; and the support to develop value chains and technologies linked to the green transition.  I have to say, President Lagarde, I welcome very much your strong statement on Capital Markets Union. We cannot say it frequently enough. We had an excellent debate here yesterday evening on ELTIF reforms, and there is a shared desire to move this project forward. So, we really need to keep up the pressure and indeed also on banking union. I look forward to the debate.