WEBVTT - Eurogroup President Paschal Donohoe on EU's Economic Outlook

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<v Speaker 1>The latest inflation data for the Euro Area. The final

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<v Speaker 1>reading for April expected to confirm a slow down in

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<v Speaker 1>core CPI to two point seven percent. The inflation outlook

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<v Speaker 1>is improving ahead of the European Parliament elections in three

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<v Speaker 1>weeks time, but concerns remain over the path for future growth,

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<v Speaker 1>debt and competitiveness. Joining us now to discuss is the

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<v Speaker 1>President of the Eurogroup, the Forum of euro Area, Finance

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<v Speaker 1>Minister Finance Ministers, and Irelands Minister of Public Expenditure, Pascal

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<v Speaker 1>dona Who. Pascal dona Who, Good morning, Good morning, Stephen,

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<v Speaker 1>how are you. I'm good, thank you, Great to see

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<v Speaker 1>you in the Bloomberg Radio studio. So let's talk about

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<v Speaker 1>the growth outlook. Then we have the update from the

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<v Speaker 1>European Commission this week. First quarter better than expected, path

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<v Speaker 1>ahead not looking great. How much of a concern is that?

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<v Speaker 2>Well, actually, the path ahead shows growth. The path ahead

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<v Speaker 2>shows growth accelerating next year to around one and a

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<v Speaker 2>half percent. And for much of the last two years

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<v Speaker 2>to commentary and analysis has been about the European Union

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<v Speaker 2>and the euro Area moving into recession. That did not happen.

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<v Speaker 2>We managed to keep our economies growing despite the war

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<v Speaker 2>or in inflation. That being said, I think the debate

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<v Speaker 2>that we're having within Europe at the moment is as

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<v Speaker 2>we've been successful in getting inflation down and avoiding recession,

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<v Speaker 2>the challenging the medium term is to look at how

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<v Speaker 2>Europe can grow faster than it has grown for some years,

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<v Speaker 2>and that is a debate now that is underway, and

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<v Speaker 2>I'd anticipate decisions will be taken about that on a

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<v Speaker 2>range of economic policy areas later on in this year,

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<v Speaker 2>in early twenty twenty five.

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<v Speaker 3>And when it comes to concerns about inflation, I wonder

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<v Speaker 3>what you think are the biggest risks to the outlook.

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<v Speaker 2>I think the risks to the outlook are ones that

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<v Speaker 2>are supplied driven mother than demand driven. I think within

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<v Speaker 2>the euro Area, for reasons of design and choice, I

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<v Speaker 2>think we've been reasonably successful in a complex environment in

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<v Speaker 2>avoiding budget policy contributing to demand and being a contributory

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<v Speaker 2>factor to inflation stayin high. I think the risk that

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<v Speaker 2>we're all aware of, particularly in open economies such as Ireland,

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<v Speaker 2>is we get another supply side shock, particularly with regard

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<v Speaker 2>to energy, and that affects that we're making not happening

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<v Speaker 2>to a high level at the moment, but it's a

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<v Speaker 2>risk that we're acutely aware of now.

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<v Speaker 1>When the French president of Maanuel Macron spoke to Bloomberg

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<v Speaker 1>earlier this week, he again pointed to the lack of

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<v Speaker 1>the capital markets union as being one of the issues

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<v Speaker 1>that's holding back growth in the euro Area. This is

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<v Speaker 1>something that you've been working on for a long time

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<v Speaker 1>at the Eurogroup. How far away does capital markets look now?

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<v Speaker 2>So we have a capital markets a degree of union

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<v Speaker 2>that we've had within the Single markers. But I think

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<v Speaker 2>the critique is a fair one. We have not made

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<v Speaker 2>the kind of progress that we should have made over

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<v Speaker 2>the last number of years. And if I go back

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<v Speaker 2>to the very first question you button me around growth,

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<v Speaker 2>what we have to do is look at how European

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<v Speaker 2>savings can be a contributory factor to European growth. The

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<v Speaker 2>Eurogroup has reached a political agreement on the action steps

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<v Speaker 2>that we believe can be taken and should be taken

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<v Speaker 2>in the year ahead to deliver that progress, and I

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<v Speaker 2>believe we can make fast progress in this area. And

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<v Speaker 2>on Monday night, all finance ministers within the European Union

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<v Speaker 2>met again in a meeting which I shared to recommit

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<v Speaker 2>ourselves to that and to look at how we will

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<v Speaker 2>deliver those action steps.

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<v Speaker 1>We are heading into the European Parliament elections, we're going

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<v Speaker 1>to have a new commission elected after that. That essentially

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<v Speaker 1>puts a lot of work at a Brussels level on

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<v Speaker 1>hold for several months. Now, what is the timescale when

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<v Speaker 1>do you think we might see perhaps a full draft

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<v Speaker 1>of what the capital market inn would look at.

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<v Speaker 2>So I'm very much aware of that as a challenge,

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<v Speaker 2>and that is why what we decided within the Eurogroup

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<v Speaker 2>is we wanted to reach agreement on political priorities that

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<v Speaker 2>would influence and guide to the decisions that a new

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<v Speaker 2>Commission would take. Commissioner Marine McGinnis I think has done

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<v Speaker 2>great work on developing capital markets during her term, but

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<v Speaker 2>we want to use the opportunity of a new Commission

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<v Speaker 2>being formed as an opportunity to say to that, then,

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<v Speaker 2>new Commission, these are the areas that we want to

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<v Speaker 2>act on. And this has been informed by many things

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<v Speaker 2>a national level. You'll be aware of the debate that's

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<v Speaker 2>happening in France led by Christianie who's made a very

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<v Speaker 2>interesting contribution to that discussion. That's now happening in Germany,

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<v Speaker 2>happening in economies such as Slovenia, it's happening in an Ireland.

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<v Speaker 2>There's real momentum now underway.

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<v Speaker 3>But if you can't get the full capital markets union,

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<v Speaker 3>and do you think it's a better idea to aim

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<v Speaker 3>for a smaller group of EU countries going ahead with

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<v Speaker 3>more cooperation if you can't get it at the EU level.

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<v Speaker 3>This is, of course the idea of the EU Economy

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<v Speaker 3>Commissioner is that one you support.

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<v Speaker 2>So I think if you look at the European Union,

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<v Speaker 2>you never reach a full union in any area of policy.

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<v Speaker 2>A full and complete union is always up there in

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<v Speaker 2>the distant horizon. The question is can you deepen the

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<v Speaker 2>union that you have? The European Union is a political project.

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<v Speaker 2>It never ever reaches a final destination. It's all about

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<v Speaker 2>how you can deepen what we have and I believe

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<v Speaker 2>we can do that. And to deal therefore with your question,

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<v Speaker 2>my very strong preference would be that we make progress

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<v Speaker 2>at the EU twenty seven level rather than in smaller groups,

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<v Speaker 2>because you know, one group of countries deeper integration is

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<v Speaker 2>another group of countries fragmentation, and I believe we can

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<v Speaker 2>do it. An EU twenty seven level. But for example,

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<v Speaker 2>the calls that are Minister Bruno la Mayer, my French

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<v Speaker 2>friend and colleague, has made in this area I think

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<v Speaker 2>have been a really helpful catalyst in this debate to

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<v Speaker 2>look at how we accelerate progress at EU twenty seven level.

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<v Speaker 3>So actually a smaller grouping would be a hindrance.

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<v Speaker 2>I wouldn't go that far. It's very much open to

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<v Speaker 2>countries if they wish to cooperate further. But if you

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<v Speaker 2>look at the EU overall, pockets of enhanced cooperation between

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<v Speaker 2>smaller group of countries are relatively rare, and I think

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<v Speaker 2>what is far more likely and achievable is how we

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<v Speaker 2>do more together and by doing that perhaps therefore less

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<v Speaker 2>in the incentive for group points of countries to come together.

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<v Speaker 1>In three weeks time, voters will be going to the

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<v Speaker 1>polls and the European Parliament elections. A lot of the

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<v Speaker 1>focus of that is on the rise of the far

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<v Speaker 1>right groups. Would a stronger a right in the European

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<v Speaker 1>Parliament derail these plans because it's set it back further.

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<v Speaker 2>Absolutely not, and we'll be making the case vigorously in Ireland,

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<v Speaker 2>and my colleagues are making it across Europe for the

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<v Speaker 2>dangers of the Far Ice and even if their parliamentary

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<v Speaker 2>representation does rise, and I don't take that as a given,

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<v Speaker 2>I'm very confident that political colleagues in a variety of

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<v Speaker 2>parties will be able to come together and form a

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<v Speaker 2>stable majority within the European Parliament.

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<v Speaker 3>And with your hat on as a minister in the

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<v Speaker 3>Irish government, immigrations really become a contentious issue in Ireland

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<v Speaker 3>because of well it's causing all these tensions in relations

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<v Speaker 3>with the UK over the return of asylum seekers who've

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<v Speaker 3>come through Northern Ireland. Do you have concerns that could

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<v Speaker 3>destabilize the windsor Framework.

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<v Speaker 2>Absolutely, I'm absolutely confident in our ability to maintain and

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<v Speaker 2>build under Windsor frameworks. So to the very contrary, Only

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<v Speaker 2>this week I had two ministers, one from Chinfein one

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<v Speaker 2>from the up in Dublin meeting me and I'll be

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<v Speaker 2>going back up to meet them to look at the

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<v Speaker 2>cooperation that's now on the way that's enabled by the

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<v Speaker 2>wins of framework agreements. So I'm really optimistic actually about

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<v Speaker 2>our ability to make that work. We've a new Northern

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<v Speaker 2>Ireland Executive from place which is full of optimism and

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<v Speaker 2>determination now to make this framework achieve agreement work, and

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<v Speaker 2>I believe it will. Really The big driver of the

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<v Speaker 2>challenges that we face now with regard to migration in

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<v Speaker 2>Ireland is we have the largest movement of human beings

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<v Speaker 2>across Europe since World War Two and we're no different

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<v Speaker 2>to any other country in grappling with that at the moment.

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<v Speaker 2>But I believe we will be able to deal with

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<v Speaker 2>it in Ireland and maintain strong support for an open

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<v Speaker 2>economy and society which arsh people are committed to.

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<v Speaker 1>Okay, Pascal Donna, who, Ireland's Minister of Public Expenditure and

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<v Speaker 1>President of the Eurogroup, thank you very much for joining us.