Remarks by Commissioner Gentiloni at the Eurogroup press conference

Thank you very much Paschal, and let me start by joining your words in paying tribute to Klaus Regling in all the efforts and the contribution that he gave in these ten years. As I said in our meeting: a solid Managing Director but also a Managing Director that gave us, frequently, food for thought. Thank you, Klaus, for this.

As Paschal said we had a discussion on the latest economic data and market developments and we heard from President Lagarde about the latest decisions of the ECB Governing Council.

Of course, we know that we are navigating troubled waters, as we say, because of the Russian invasion of Ukraine; and this is casting a shadow over our economy – at the global level, and in Europe, in particular. But at the same time, I frequently insist these days that we have also signs, demonstrating – as you say, Paschal – the resilience of our economy.

And this is in large part – because we have to use the lessons learned – thanks to our strong policy response and unity showed during the COVID-19 crisis. You know that the latest figures from Eurostat point to a stronger-than-expected growth in the first quarter, at 0.6% in the euro area, 0.7% in the Union as a whole. You know that the unemployment rate in April remained at an all-time low.

Of course, we all recognise the difficult situation that we have with inflation continuing to rise, and reaching 8.1% in May. The energy and food components account for 6 percentage points of the annual inflation rate but every major component of inflation is ticking up. This shows that it is becoming broader and more persistent, of course.

We learned many lessons with the last crisis, but perhaps the stronger one is that we have to show our unity and our determination – because this was very important during the crisis to give a response and also to convince the markets of our response. And this was done with SURE, with the RRF, and now it is what we are trying to do with what we call ‘REPowerEU'.

In general, all Member States need to implement their plans with strong determination and at the same time pursue prudent fiscal policies in line with our recommendations – especially, for countries with high debt levels. I think this is a way to ensure an interplay between fiscal and monetary policies, which was very important in the past two and a half years, and which is still very important.

We can't ask monetary policy to address and solve all problems. We have to show our unity and determination with economic choices and fiscal policy.  With a consistent policy mix, I'm confident that the euro area will navigate these waters we are now entering.

We had some good news, as the President of the Eurogroup reminded us – very good news. We could say historic, in some sense; at least, for these countries: first, we presented the Convergence Report today, especially discussing Croatia. You know that the Commission considered that Croatia is ready to adopt the euro beginning 1 January 2023. And I'm pleased that there was full support today among all ministers for our conclusion and for the adoption of the necessary legal acts.

Please, recall – when we speak of this 27^th country adopting the currency – where Croatia is coming from. Not only what they are doing now, the importance of the Government's achievement, but the fact that in the 1990s Croatia was in a war – a terrible war. And the fact that now they are joining the single currency is incredibly positive for the country and for our Union. The decision on Croatia's accession is expected to be taken at the July ECOFIN. In the meantime, preparations for the changeover from the kuna are underway, both at technical level and from a communications perspective. The Minister informed us about these preparations. Of course, in these times of high inflation, the changeover is essential to be managed in the right way to avoid risks that several countries live with the changeover – that with inflation are, especially, higher risks.   

Of course, Croatia will need to continue with reforms and investments to increase potential growth, while pursuing prudent fiscal policies and strengthening the institutional framework.

The second piece of good news, on Greece, is the fact that we delivered on the first of the remaining two tranches of the debt; and I confirmed to ministers the intention of the Commission to conclude in August the enhanced surveillance period. Again, something – I don't want to use too much the word ‘historic'; but for you, following these past 15 years the crisis in Greece, the fact that this country is getting out of enhanced surveillance is a key step in the normalisation of Greece's economic surveillance – that will continue, with the tools that we use for post-programme surveillance.

We have to say that Greece has successfully delivered on the commitments agreed on 2018 with the Eurogroup and the implementation of reforms has improved the resilience of the Greek economy. And I think it's quite impressive the fact that part of these commitments were made during the 2 or 3 years behind us – the years of the pandemic, the crisis, and now the war – and, despite this, the progress continues. Of course, many challenges are still there and we will work with the Greek authorities through our post-programme surveillance – well established, because we are at our 17^th post-programme report for Spain, for example. It's well-established the post programme surveillance mechanism.  

And let me congratulate Minister Christos Staikouras and Greece for this achievement.

Finally, some words on the Banking Union.

As the President said, I think that the statement that we agreed – that the ministers agreed today – marks progress, especially, in the key area of crisis management and the deposit insurance national framework. Here, the Commission is tasked to work and to come with proposals; and, of course, we are committed to do this.

The objective of any reform should be to ensure that any bank can exit the market smoothly and to ensure more consistent approaches across all countries in the Banking Union: to bring greater financial stability, protect taxpayers and improve the confidence of depositors.

The President of the Eurogroup, I assure you, put so much effort into Banking Union over the past year, and the result is important. It's a step forward in the direction that we all support.

So let me conclude by applauding those efforts and thanking you, Paschal – not only for the book, which is very much appreciated – but for your efforts, your perseverance and determination that the Commission will support.