Remarks by Commissioner Dombrovskis at Eurogroup press conference

Thank you, Kyriakos. Good evening, everyone.

I will begin with our discussion on energy.

The European economy continues to face the consequences of the energy price shock that began far beyond Europe's borders.

So far, our economy has stayed resilient.

But in the medium to long-term, it is clear that the only structural solution is to reduce our dependency on fossil fuels.

The Commission has put forward proposals in this regard in recent months.

We have also broadened the flexibility under the national escape clause for defence to cover measures to enhance energy security.

The Commission has also now positively assessed the requests of both Greece and Italy to make use of this broadened flexibility.

In the short run, unfortunately, price pressures may continue as we move into winter.

It is important that any short-term measures to alleviate their impact are targeted at the most vulnerable.

Broad measures would not only be fiscally too costly, they would also drive up energy demand and prices, and thus fail to help those in need.

Allow me to also say a few words on the broader fiscal context.

In recent weeks, we have seen rising yields in global sovereign bond markets and increasing spreads within the euro area.

So, fiscal prudence is required.

Member States should stick to the targets of their medium-term fiscal structural plans.

And use the flexibility available under the broadened national escape clause with caution.

It is also worth noting that our new fiscal framework already contains various elements of flexibility to cater for the current situation in a balanced manner.

Indeed, a key feature of our fiscal framework is counter-cyclicality.

This means, for example, that revenue shortfalls due to economic slowdowns should not be compensated for.

Also, an increase in interest expenditure should not be compensated for within the ongoing medium-term plan.

This is clearly relevant at the current juncture.

Finally, upward inflation pressures are already considered as part of an overall assessment of  relevant factors when assessing Member States' compliance with fiscal rules.

To summarise, we cannot come with new fiscal flexibilities all the time.

In fact, this could cast doubt on our collective resolve to uphold the rules-based fiscal framework at a time when the credibility of our commitment to fiscal sustainability is a vital asset.

So, we should not put that at risk.

This brings me to our discussion on the quality of public finances.

This is a priority for all Member States.

On the one hand, fiscal space is much tighter than in the past.

On the other, we face urgent spending needs, particularly to strengthen our defence capabilities, but not limited to that.

This makes improving the effectiveness and efficiency of public finances a priority for the here and now.

First, we should improve the composition of our budgets, so that they do more to support growth and keep unproductive or distortive spending to a minimum.

Second, we should look closely at individual spending categories, so that we can achieve our policy objectives in the most cost-efficient way.

And third, budgets need to become more adaptable to changing circumstances and priorities.

The potential gains are significant.

A better composition of budgets could generate fiscal gains of up to 3% of GDP.

In addition, higher spending efficiency could add a further 1.5% of GDP over the medium term.

In short, spending better creates space for spending more on what matters most.

It creates savings and gains that we simply cannot afford to ignore.

Finally, the Commission presented its assessment of developments of progress on the capital markets union, based on developments in different Member States.

The progress reported was encouraging.

But we need to further lift our level of ambition, to boost the returns on our citizens' savings and to provide our companies with the funding they need.

Thank you.