Remarks by Executive Vice-President Dombrovskis at the ECOFIN Press conference

©European Union, 2021, Source: EC - Audiovisual Service©European Union, 2021, Source: EC - Audiovisual Service

Thank you minister, good afternoon everyone.

First of all, today the Ecofin Council endorsed the Recovery and Resilience Plan of the Netherlands: congratulations. This brings the total number of adopted plans to 26.

Turning to Ukraine and the economic damage caused by Russia’s protracted aggression: this has now escalated to a new level – with Putin’s mobilisation order, his threat to use nuclear weapons and Russia’s completely illegal annexation of even more Ukrainian territory.

The EU has responded with a proposed eighth round of sanctions to isolate Russia, hit its economy even harder and deprive its military complex of key technologies.

On supporting Ukraine: yesterday I signed the Memorandum of Understanding with Ukraine for the next macro-financial assistance of €5 billion. We will disburse the first part – €2 billion – by mid-October.

We want to move as fast as possible with disbursing the remainder, with two instalments in November and December, subject to all relevant conditions being met.

Turning to the economic situation in the EU: this remains highly complex and uncertain. We can no longer exclude a contraction of economic activity over the winter.

Europe is paying a high price for its dependence on Russian fossil fuels and lack of domestic energy sources.

This is made worse by Russia’s cynical tactic of using its energy supplies as a weapon of blackmail and manipulation.

Surging energy prices, fuelled by Russia’s war against Ukraine, continue to drive inflation.

In its latest flash estimate, Eurostat expects euro area inflation to hit 10% in September, up from 9.1% in August.

As we enter the autumn heating season, the most immediate issue is to tackle high energy bills and lessen the pain for consumers.

So today, ministers discussed options to ensure that wholesale energy markets function in an orderly way: to counter Russia’s manipulation of supplies and to lower prices paid by European customers for gas imports.

By mid-October, the Commission will propose extending and revising the temporary state aid rules now in force.

This is so that Member States can continue to provide necessary and proportionate support to their economy – as well as to energy firms facing high margin requirements, including through providing state guarantees.

Purchasing power is also a big issue, where we encourage Member States to take measures to help where it is most needed: tailored, targeted and effective for these specific circumstances – especially supporting the most vulnerable.

I would reiterate again the importance of working together in a spirit of solidarity and close coordination at this difficult time – something that ministers discussed yesterday in Eurogroup and also today in Ecofin.

However, we need to be cautious about our spending policies, to avoid fuelling inflation further – because that would lead to higher interest rates and reduce the available fiscal space even more.

For the longer term, many of the reforms and investments identified in national Recovery and Resilience Plans will play a vital role in bolstering our energy security.

So we welcome today’s agreement to add dedicated REPowerEU chapters into existing Recovery and Resilience Plans. This is an excellent way to finance measures to address high energy prices and energy poverty, by boosting energy efficiency and supporting vulnerable people and companies.

To help Member States achieve this quickly, pre-financing will be granted for part of the amount contained in each plan that is dedicated to REPowerEU.

I would also like to welcome today’s agreement on an EU law on minimum wages.

At such a challenging time, it is vital to protect low earners and make sure that they have a decent living standard.

I will conclude with a few words on customs, where ministers discussed modernisation of the EU customs system.

EU customs collect more than €70 billion annually at the EU border. They protect our financial and economic interests.

They ensure the security and safety of goods and facilitate trade. Customs also often enforce international sanctions on the ground.

We have strong EU cooperation on the free movement of people and capital. But on the free movement of goods, we still have 27 authorities acting independently from one other.

So we want to change it – and in December, the Commission will propose a reform of the Customs Union. We want to strengthen its capacity – with clear, simple enforceable rules that also support e-commerce. Thank you.