Brussels, 7 November 2022
The Council presidency, the European Central Bank and the European Commission met with European social partners on 7 November 2022 to discuss recent developments of the economic situation, as well as the energy crisis and its impact on the EU economy.
The global energy imbalance following the end of the pandemic has been aggravated by the Russia’s war of aggression against Ukraine and various other factors, such as the delayed maintenance of gas infrastructures. Mainly due to energy price hikes, the EU economy is experiencing another major negative shock. Most economic agents have been experiencing adverse microeconomic consequences. With respect to households, rising energy costs are increasing the cost of living. Firms have to deal with rising production and operating costs. As called for by the social partners, the crisis cannot be solved by conventional means, but extraordinary instruments are needed to safeguard the most vulnerable, to maintain the competitiveness of our economies, and to preserve social cohesion in the EU. The Czech presidency promotes European solutions to be delivered as swiftly as possible. In general, the unusual situation in the energy market and the overall uncertain macroeconomic environment call for a collective change in behaviour and a continued social dialogue to exit the crisis with a more resilient and greener EU economy.
Zbyněk Stanjura, Minister of Finance of Czechia and chair of the Council in Ecofin formation
Russia’s war on Ukraine has major socio-economic consequences for the entire European Union. Record high energy prices and inflation are hurting EU families and businesses, with lower-income households hit the worst since they spend proportionally more on food and energy. We must give strong support to those in need, while providing incentives to save energy and maintaining a cautious fiscal stance to avoid fuelling inflation. This can only be achieved by doing a better job at targeting support measures. Social dialogue and collective agreements have an essential role to play as well. At the same time, Europe is keeping up its work to secure alternative sources of energy supply, including renewables, and to reduce our energy demand. We must stay on course to build a solid basis for Europe’s future prosperity. Here, full implementation of reforms and investments in the Recovery and Resilience Plans will help a great deal. This is not only about energy, but also about Europe’s global competitiveness and social welfare.
Valdis Dombrovskis, Executive Vice-President of the European Commission
We had a very productive exchange of views at today’s macroeconomic dialogue in a difficult context given the war in Ukraine. On the economic front, European economies have stepped up and stood firm, perhaps best encapsulated by a record low level of unemployment. That said, we are all fully aware of the challenges and risks we face particularly in relation to energy costs and inflation. It is imperative that we continue to work together and to coordinate, with policies that are agile, targeted and supportive where needed.
Paschal Donohoe, President of the Eurogroup
Europe faces the risk of a long and deep recession if today’s cost-of-living crisis is not dealt with correctly. The EU and member states must work together to save jobs and businesses, encourage pay rises through collective bargaining, and tax profits to enable short, medium and long-term investment in economic modernisation including to secure reliable and climate-friendly energy supplies, to promote digitalisation and achieve social justice. To do so, the EU needs a new solidarity mechanism like SURE that helped the EU going through the covid pandemic and prevented far worse economic outcomes. The EU’s economic-policy making rules must be reformed to enable more investment and prevent austerity that would make the EU’s economic and inequality problems even worse. Economic policies must take into account the impact on jobs and standards of living of working people when contemplating restrictive policy moves. There is also an urgent need to immediately support working people and the vulnerable to get through the cost-of-living crisis so that they don’t plunge into poverty.
Luca Visentini, ETUC General Secretary
Business sentiment has declined rapidly after a strong first half year driven by post-covid service sector reopening. Soaring energy bills and continuing supply chain disruptions mean costs for businesses are rising much faster than consumer inflation. EU leaders need to agree urgently on new measures to alleviate energy costs for businesses. Recent decisions to invest on other continents rather than in Europe due to concerns over long-term energy prices in the EU, which have been heightened by the depth of the present energy crisis in the EU, are a signal that cannot be ignored. Action is needed now to avoid further investment leakage. In particular, policymakers should consider EU-wide measures to temporarily decouple electricity prices from gas prices and grant governments the necessary flexibility to support businesses while maintaining a level playing field in the single market. In view of limited fiscal space in many Member States, measures to support consumers and businesses with energy costs must be temporary and well-targeted. In this context, social partners can play an important role in helping to continue to prevent the emergence of a damaging wage-price spiral.
Markus J. Beyrer, Director General of BusinessEurope
Today, enterprises providing services of general interest (SGIs) are facing extreme pressures that threaten their ability to fulfil their missions, to invest, and to anticipate the impacts of climate change. Rising energy and commodity prices, labour shortages, and the increasing difficulty for end-users to pay their bills: all point to a growing risk of insolvency and service interruption for SGIs. Support to households and enterprises is needed, but this support must be temporary to contain fiscal costs while maintaining price signals to foster energy savings. Collective bargaining and timely and balanced wage negotiations are also part of the solution. With its ambitions to boost low-carbon energy systems and lowering energy consumption, the EU Green Deal is the central element to guarantee the EU’s long-term resilience and security of energy supply, and remains the only viable long-term plan for the EU.
Valeria Ronzitti, General Secretary of SGI Europe
SMEunited calls on all EU Member States to act immediately and implement targeted measures for SMEs that require support in the energy crisis. The emergency regulation already provides several instruments for intervention in the retail market. In addition, only alignment at EU level can guarantee the integrity of the single market. On the cost of living, social partners should negotiate wages responsibly to avoid a dangerous wage/price spiral.
Véronique Willems, SMEunited Secretary General
The macroeconomic dialogue with European social partners constitutes an important step in designing appropriate policy responses to the challenges facing EU economies. It is important to have a shared understanding to tackle the current energy crisis, which is driving up inflation and affecting households and businesses alike. With the Swedish presidency around the corner, we look forward to chairing this valuable exchange between the social partners and EU institutions next year.
Anna Widenfalk, Deputy Director-General, Ministry of Finance of Sweden (Swedish Presidency: January – June 2023)
One of the main lessons we learned from the pandemic is that it is much more efficient and cheaper to protect than to let something be destroyed and then have to rebuild it from scratch. It is a lesson that we ought to keep in mind when deciding on the correct policy response to our economic problems. We have to act with unity, determination and solidarity. This proved to be the right response to the pandemic and should guide us going forward.
Nadia Calviño, Minister for Economic Affairs of Spain, future chair of the Council (Spanish Presidency: July – December 2023)
The next macroeconomic dialogue will be organised under the Swedish presidency.
Source – EU Council