Eurogroup President Pascal Donahue and European Economic Commissioner Paolo Gentiloni warned of serious dangers from the war in Ukraine at a news conference after the Eurogroup meeting.

“It is clear that the impact of the war is global and the consequences are very serious, especially for the most vulnerable in our societies,” said the president of the Eurogroup. “The eurozone is facing serious challenges, but we have the determination to succeed,” he said.

Donahue also warned that there would be an impact on the growth of the Eurozone, especially in the short term, while the price rally means that the purchasing power of Europeans has been hit.

In this context, he noted that fiscal policy should be flexible and able to react to developments, especially in an environment of high uncertainty.

The head of the Eurogroup, however, said that these developments and the extension of the general escape clause until 2023 do not change the plan of transition of the strategy from a supportive environment this year to a neutral one afterwards.

Regarding the banking union, Donahue noted that different views remain on the table and discussions are continuing with the aim of making further progress in reaching an agreement in June.

For his part, Commissioner Gentiloni stressed that the war “changed the course of the economy”, warning of a slowdown in growth and higher inflation.

“Downside risks remain high, while uncertainty is high,” he said, adding that the economy was still far from normal.

The extension of the general escape clause until 2023 will allow fiscal policy to react to the pressures, he noted.

Finally, the President of the European Stability Mechanism (ESM) Klaus Regling noted that it is not only the Russian invasion of Ukraine that creates adversity, but also the new waves of Covid-19 in China and the lockdowns in major Chinese cities that create serious problems in global supply chains and growth, but also concerns about the outlook for the US economy.