In the Eurogroup measures-embankment to be exact

Of Tasos Dasopoulos

Closer to joint European action to tackle the energy crisis, but also food inflation, are the “anti-sanctions” that Russia is preparing to implement on food and fuel.

The first topic of discussion for the Eurozone finance ministers in Luxembourg will be the assessment of the effects of the war on European economies. They will also discuss all the measures that have been on the table since the last two summits, in the direction of rationalizing prices and supporting the EU economies.

On the issue of prices, the finance ministers will reconsider the issue of the joint gas supply, in an effort to reduce the very high prices, which also affect the electricity tariffs. The Greek proposal for the imposition of a ceiling on fuel prices across Europe will also be examined.

On the crucial issue of supporting households and businesses, there are council members who want to reconsider the French proposal to set up a common European Energy and Defense Fund, to be financed by a new Eurobond.

The proposal, with the exception of France, is supported by the whole of the European South (Italy, Spain, Portugal and Greece) provided that expenditures made on loans from the new fund to support households and businesses do not count on deficits and debt.

The – very likely – possibility of extending fiscal flexibility for next year is also expected to be discussed. As it is known, it has already been decided not to apply the 60% debt limit for next year (regardless of whether and when changes will be decided), which facilitates the heavily indebted states and therefore Greece. It has also been agreed not to activate the Excessive Deficit Procedure for next year, so as not to force some states to cut.

Housing subsidy for the financially vulnerable

Another aspect of the problem of high inflation to be discussed by Eurozone finance ministers is the high house prices across the Eurozone which, combined with declining disposable income, especially in the most economically vulnerable households that make support necessary and of low-income housing.

In a report to be presented by the Commission, it is pointed out, first of all, the continuous increase of house prices in the Eurozone, the last house which dragged up the level of rents.

The committee points out the risk after two consecutive crises (of the coronavirus and the energy) for a sharp correction in real estate prices and a drop in investment in housing.

More immediately, the alarm bells are ringing, due to the general decrease in the purchasing power of households, many of which will find it difficult to cover their mortgage installments or pay their rent.

The report proposes policies that can be pursued to reduce housing costs. In particular, it mentions the possibility of subsidies to specific groups but with the need for safety valves, so that the benefits are not transferred to the owners, thus catering to either house prices or rental costs.

It also notes that policies are needed to provide affordable housing. In this regard, it proposes incentives for renting vacant houses, for a better interconnection aimed at decentralization, and for energy upgrade programs, which, however, should not lead to an increase in the prices of renovated houses.