Debate: Tackle the cost of living crisis: increase pay, tax profits, stop speculation
Date: WEDNESDAY, 14 DECEMBER 2022
Speaker: Paolo Gentiloni
Language: EN

We know that, as a result of the war of aggression against Ukraine, we had further factors, elements, of crisis after the pandemic. And so families and businesses face a global surge in food prices and energy prices. And, of course, lower income households are worst hit. For the poorest households in the EU, electricity and gas absorbs a large share of their total spending, being the second spending item after food. Inflation has soared in the past year, mainly in light of rising energy and commodity prices, a tendency that has been reflected in a more general increase in prices. And businesses are also affected by rising energy costs, higher financing costs and lower consumer confidence. And this is particularly relevant for energy intensive sectors. But, all in all, we are surely facing a cost of living crisis that requires appropriate responses.  The Commission, starting with the energy, emphasised the need to address the impact of inflation on the more vulnerable citizens through targeted measures. As you know, not all measures that were taken or announced are indeed targeted to the most vulnerable but most of these measures now expire by the end of the first quarter of 2023. So I think we have now an opportunity to act in a more coordinated way.  We would therefore recommend that these support measures that are taking a large part of national budgets be first targeted to the most vulnerable, second fiscally affordable – and the two things are connected, of course – and third they preserve the price signal to maintain incentives for reducing energy consumption as set out in our proposed euro area recommendation. We also need to acknowledge that public finances can benefit from windfall profits from certain energy companies. As you know, the Commission has proposed a price cap on market revenues for inframarginal producers and the solidarity contribution from the fossil fuel sector. This will allow Member States, together with national measures when they are taken, to channel very large profits, extraordinary profits towards who need support the most. Addressing the cost of living crisis requires also restoring the purchasing power of wages. The attention to low-income workers is reflected in the Directive on Adequate Minimum Wages in the EU, which entered into force one month ago.  Besides providing relief to the most vulnerable, we need to secure alternative sources of supply to reduce our energy demand, accelerated with the clean energy transition, because you know that energy is now the main driver of this increase of the cost of living and of inflation.  The additional resources from REPowerEU – and I congratulate for the agreement reached tonight – will incentivise Member States to modify and amend their plan to accelerate the necessary investments and to address energy poverty. We need to be flexible in our reply to the crisis, learn from the lessons and the experience of these years, taking into account the examples of recent years’ success, such as the SURE mechanism. Thank you, and I look forward to the debate.