The largest energy crisis in history
The EU Commissioner for Economy, Productivity, Enforcement and Simplification, Valdis Dombrovskis, spoke about a stagflationary shock due to the crisis in the Middle East, while speaking at the Delphi Economic Forum XI on Friday, in a panel with Greek National Economy and Finance Minister and also President of the Eurogroup, Kyriakos Pierrakakis.
The Commissioner said that, according to one scenario, there will be an adverse impact on the European economy, depending on how long the crisis lasts and how intense the shock is, from 0.2 to 0.6 points, while based on another scenario it will be more than 1 point.
According to him, the release of oil reserves is planned in Europe, while there is a risk for aircraft fuel, given that 70% is produced in Europe and 30% is imported.
However, as he said, this is not the time for the escape clause, as “we are not in the scenario of a serious economic recession. Therefore, he added, the message must be temporary and targeted, taking into account the fiscal constraints on debt and deficit. The fiscal space is limited and therefore the fiscal measures must be temporary and targeted, he added. He set two main priorities, strengthening competitiveness and strengthening security and defense. At the same time, he pointed out that this is not the time to relax sanctions against Russia.
On his part, Pierrakakis spoke of the largest energy crisis in history, as in addition to the reduction in fuel, there is also the impact on assets in the region, with 30 out of approximately 80 in total having been affected. However, he added that Europe is more stable and resilient than in 2022, noting that “we must stay calm”. He said that a coordinated effort is needed from a fiscal perspective, but not contrary to monetary policy. The challenges still lie ahead, he said, adding that the measures must be temporary and targeted, while a long-term investment in networks and interconnections is needed.
Asked about additional support measures in Greece, he replied that a package targeting the most vulnerable and those in need of help was announced two days ago, and “we do not intend to announce another package of measures at this time.” He also referred to the situation in the Greek economy, with high primary surpluses and rapid debt de-escalation.
