1 00:00:00,040 --> 00:00:02,320 Speaker 1: Pascal Dona, Who, President of euro Group in Irelands, Minister 2 00:00:02,360 --> 00:00:05,000 Speaker 1: of Public Expenditure, thank you for joining us. We've had 3 00:00:05,000 --> 00:00:08,240 Speaker 1: a couple of days of huge market volatility, partly due 4 00:00:08,280 --> 00:00:10,559 Speaker 1: to fears about a slowing economy in the US. How 5 00:00:10,640 --> 00:00:12,280 Speaker 1: much of a concern is that to you and your 6 00:00:12,280 --> 00:00:13,840 Speaker 1: colleagues and the Eurogroup. 7 00:00:13,560 --> 00:00:16,640 Speaker 2: So will continue to monitor developments that are taking place 8 00:00:16,680 --> 00:00:19,599 Speaker 2: in America from Afar and this side of the Atlantic. 9 00:00:19,880 --> 00:00:22,920 Speaker 2: It looks to us that we've seen in the American 10 00:00:22,960 --> 00:00:26,680 Speaker 2: economy that has grown so strongly in the aftermath of 11 00:00:26,840 --> 00:00:30,440 Speaker 2: the pandemic. It's had rates of growth, rates of employment 12 00:00:30,520 --> 00:00:34,199 Speaker 2: growth that have been so impressive. It appears to me 13 00:00:34,840 --> 00:00:37,800 Speaker 2: the outlook for the American economy will continue to be 14 00:00:37,840 --> 00:00:41,199 Speaker 2: strong and continue to be positive. But I know markets 15 00:00:41,320 --> 00:00:46,040 Speaker 2: react very strongly to changes nuance and tone from policymakers. 16 00:00:46,720 --> 00:00:49,400 Speaker 2: But certainly from our point of view, if we look 17 00:00:49,440 --> 00:00:52,760 Speaker 2: at the recent performance of the American economy in terms 18 00:00:52,840 --> 00:00:56,440 Speaker 2: of employment and outputs, it continues to look very positive 19 00:00:56,840 --> 00:01:00,360 Speaker 2: and we think this ample opportunity for further trade and 20 00:01:00,440 --> 00:01:04,720 Speaker 2: further positive economic engagement with the US if the politics 21 00:01:04,720 --> 00:01:05,759 Speaker 2: continue to allow us. 22 00:01:06,400 --> 00:01:08,960 Speaker 1: Is there a risk from the strength of the US 23 00:01:09,000 --> 00:01:11,640 Speaker 1: economy being detrimental to the Euro Area. 24 00:01:11,720 --> 00:01:16,240 Speaker 2: Well, there's always risks when we see really important trading 25 00:01:16,319 --> 00:01:20,520 Speaker 2: partners have a change in their economic outlook. So whether 26 00:01:20,560 --> 00:01:23,640 Speaker 2: it be America, whether the other parts of the global economy, 27 00:01:23,680 --> 00:01:27,640 Speaker 2: if their economic outlook begins to change, of course that 28 00:01:27,680 --> 00:01:31,480 Speaker 2: can have an effect, particularly on such an important trading 29 00:01:31,560 --> 00:01:36,600 Speaker 2: partner as Europe as in America. But again I would 30 00:01:36,640 --> 00:01:38,800 Speaker 2: just go back to the medium term outlook for the 31 00:01:38,800 --> 00:01:42,720 Speaker 2: American economy. It continues to look really positive. Their performance 32 00:01:42,760 --> 00:01:46,200 Speaker 2: in the aftermath of the pandemic has been so strong 33 00:01:46,520 --> 00:01:50,600 Speaker 2: in terms of employment growth and economic growth itself, and 34 00:01:50,640 --> 00:01:54,760 Speaker 2: despite the volatility in markets in recent days, my own 35 00:01:54,800 --> 00:01:58,640 Speaker 2: sense is that performance and that outlook continues to be there. 36 00:01:58,960 --> 00:02:01,440 Speaker 1: Part of the effect of the market termol, though, has 37 00:02:01,480 --> 00:02:04,560 Speaker 1: been markets pricing in more rate cuts from the European 38 00:02:04,640 --> 00:02:07,760 Speaker 1: Central Bank. Would further rate cuts be welcome in your viewer? 39 00:02:07,920 --> 00:02:11,000 Speaker 1: Are they a signal of weakness in the Euro Area economy. 40 00:02:11,480 --> 00:02:14,120 Speaker 2: Well, that's the decision very much for the European Central 41 00:02:14,120 --> 00:02:18,359 Speaker 2: Bank to make, and we always respect as Finance Minister 42 00:02:18,440 --> 00:02:22,359 Speaker 2: as their independence in decisions they make. But I think 43 00:02:22,440 --> 00:02:25,680 Speaker 2: their indication is that they believe we are going in 44 00:02:26,200 --> 00:02:29,399 Speaker 2: broadly in the right direction with regard to inflation. That'll 45 00:02:29,400 --> 00:02:33,440 Speaker 2: continue to monitor us and if that journey with inflation continues, 46 00:02:34,160 --> 00:02:38,000 Speaker 2: that will have positive consequences then for decisions they make. 47 00:02:38,480 --> 00:02:41,639 Speaker 2: I think that can only help where we are in 48 00:02:41,720 --> 00:02:45,960 Speaker 2: our ability to increase growth within Europe. And if I 49 00:02:46,040 --> 00:02:48,680 Speaker 2: look at the project that we need to deliver here 50 00:02:48,720 --> 00:02:52,600 Speaker 2: in Europe, it's about how we can improve our growth 51 00:02:52,680 --> 00:02:56,760 Speaker 2: performance as we have been successful in getting inflation down 52 00:02:57,400 --> 00:03:00,880 Speaker 2: and regardless of what happens in other parts of the world, Stephen, 53 00:03:01,160 --> 00:03:03,120 Speaker 2: that's the journey that we need to continue on. 54 00:03:03,440 --> 00:03:05,760 Speaker 1: Well, one of the issues that you raised after the 55 00:03:05,840 --> 00:03:08,799 Speaker 1: last YUR Group meeting in July was the issue of 56 00:03:09,120 --> 00:03:13,959 Speaker 1: sustainable fiscal consolidation. Gradual and sustained was the language that 57 00:03:14,040 --> 00:03:16,720 Speaker 1: you used. What was needed in the euro Area. What 58 00:03:16,760 --> 00:03:19,399 Speaker 1: does that look like in practical terms. 59 00:03:19,760 --> 00:03:23,040 Speaker 2: What it looks like practically is the very big energy 60 00:03:23,160 --> 00:03:29,160 Speaker 2: support measures that were in place in different national economies 61 00:03:29,200 --> 00:03:32,400 Speaker 2: when inflation was so high that they need to be 62 00:03:32,480 --> 00:03:37,640 Speaker 2: phased out and entirely removed. In twenty twenty five, we 63 00:03:37,880 --> 00:03:42,720 Speaker 2: have across so many economies at the moment fiscal measures 64 00:03:42,760 --> 00:03:46,560 Speaker 2: that were but in place true taxation and true expenditure 65 00:03:47,400 --> 00:03:51,920 Speaker 2: with the aim of offsetting the impact of high energy pricing. 66 00:03:52,840 --> 00:03:55,640 Speaker 2: As we have seen inflation come down and as we 67 00:03:55,760 --> 00:03:58,920 Speaker 2: have seen the cost of energy come down. Practically with 68 00:03:59,080 --> 00:04:02,400 Speaker 2: that now means is those support measures that were in 69 00:04:02,440 --> 00:04:05,160 Speaker 2: place that were meant to be temporary come to an 70 00:04:05,280 --> 00:04:07,720 Speaker 2: end next year. And if they come to an end, 71 00:04:08,160 --> 00:04:13,080 Speaker 2: that in turn will create the opportunity for deficits across 72 00:04:13,120 --> 00:04:15,960 Speaker 2: the Euro Area in twenty twenty five to come down again. 73 00:04:16,279 --> 00:04:18,480 Speaker 2: So that's the big practical next step that we need 74 00:04:18,520 --> 00:04:18,920 Speaker 2: to deliver. 75 00:04:19,240 --> 00:04:21,640 Speaker 1: There's the political realities of that as well, though, and 76 00:04:21,640 --> 00:04:24,480 Speaker 1: in countries like France, for example, where we're in sort 77 00:04:24,480 --> 00:04:27,520 Speaker 1: of political stasis. Is it going to be possible for 78 00:04:27,600 --> 00:04:30,560 Speaker 1: countries like France to achieve that aim? Are you worried 79 00:04:30,560 --> 00:04:32,560 Speaker 1: about the French public finances? 80 00:04:33,040 --> 00:04:36,520 Speaker 2: So my view is if you look at the Euro 81 00:04:36,640 --> 00:04:41,120 Speaker 2: Area budget outlook, and even if you look at the 82 00:04:41,160 --> 00:04:45,160 Speaker 2: outlook of economies such as the French economy, I'm very 83 00:04:45,200 --> 00:04:48,680 Speaker 2: confident in the stability of their public finances and the 84 00:04:48,680 --> 00:04:52,920 Speaker 2: stability of the Euro Area overall. Of course, in order 85 00:04:52,960 --> 00:04:56,360 Speaker 2: for a budget to be passed within the French Parliament, 86 00:04:56,400 --> 00:04:58,840 Speaker 2: there needs to be a government in place, and there 87 00:04:58,880 --> 00:05:02,359 Speaker 2: needs to be the policy consensus to implement that budget. 88 00:05:02,960 --> 00:05:05,200 Speaker 2: And look, that work is underway, and I'm sure we'll 89 00:05:05,240 --> 00:05:09,120 Speaker 2: only intensify in the aftermath of the Olympics. But overall, 90 00:05:09,279 --> 00:05:13,040 Speaker 2: I am very confident in the outlook of the euro 91 00:05:13,240 --> 00:05:17,920 Speaker 2: Area deficits and our ability to manage that. And I 92 00:05:17,960 --> 00:05:20,640 Speaker 2: also believe that in our bigger economy, such as the 93 00:05:20,640 --> 00:05:25,000 Speaker 2: French economy, over time we will have the ability to 94 00:05:25,040 --> 00:05:27,640 Speaker 2: see those levels of borrowing go back to a more 95 00:05:27,680 --> 00:05:28,359 Speaker 2: normal place. 96 00:05:28,720 --> 00:05:30,880 Speaker 1: Do you see a risk though, that markets might not 97 00:05:30,960 --> 00:05:35,040 Speaker 1: be as optimistic as you are in seeing that situation improving. 98 00:05:35,640 --> 00:05:39,320 Speaker 2: I accept that risk is there. We all understand that 99 00:05:39,360 --> 00:05:44,520 Speaker 2: the financial markets monitor these developments very very closely. But 100 00:05:44,880 --> 00:05:47,920 Speaker 2: we are in the early phase of the implementation of 101 00:05:48,000 --> 00:05:51,280 Speaker 2: a new budget framework within the European Union that we've 102 00:05:51,360 --> 00:05:54,159 Speaker 2: all signed up to deliver. I believe the commitment is 103 00:05:54,200 --> 00:05:57,480 Speaker 2: there to deliver that, and as that is delivered, that 104 00:05:57,560 --> 00:06:01,960 Speaker 2: will lead to a gradual reduction in borrowing. But also 105 00:06:02,080 --> 00:06:04,880 Speaker 2: we all appreciate this as something the financial markets do 106 00:06:05,000 --> 00:06:09,640 Speaker 2: monitor and do respond back to in terms of the 107 00:06:09,760 --> 00:06:14,760 Speaker 2: cost of borrowing. Because all finance ministers do recognize that 108 00:06:14,760 --> 00:06:20,000 Speaker 2: that of itself will create a dynamic that allows borrowing 109 00:06:20,120 --> 00:06:23,560 Speaker 2: across next year, in particular to come down gradually and 110 00:06:23,600 --> 00:06:24,560 Speaker 2: to come down credibly. 111 00:06:24,839 --> 00:06:27,279 Speaker 1: One of the other European projects that we've spoken about 112 00:06:27,279 --> 00:06:30,360 Speaker 1: before is the Capital Markets Union. The last time we spoke, 113 00:06:30,400 --> 00:06:32,160 Speaker 1: he says, you weren't concerned about the results of the 114 00:06:32,200 --> 00:06:36,200 Speaker 1: European elections delaying or hindering that process. What's your best 115 00:06:36,240 --> 00:06:38,880 Speaker 1: hope now on a timetable for progress there as we're 116 00:06:39,160 --> 00:06:42,440 Speaker 1: waiting for confirmation of the new European Commission that we. 117 00:06:42,520 --> 00:06:47,760 Speaker 2: See in new European Commission appointed, I hope shortly after 118 00:06:47,920 --> 00:06:52,360 Speaker 2: the summer, and that what will then allow to happen 119 00:06:52,640 --> 00:06:55,640 Speaker 2: is we will have a commissioner in place with particular 120 00:06:55,680 --> 00:07:01,359 Speaker 2: responsibility for capital markets, and that new Commissioner in the 121 00:07:01,440 --> 00:07:06,799 Speaker 2: early part of next year outlines a strengthened action plan 122 00:07:07,320 --> 00:07:10,680 Speaker 2: regarding how we can accelerate progress on the development of 123 00:07:10,720 --> 00:07:14,040 Speaker 2: capital markets. So I believe a majority is there within 124 00:07:14,080 --> 00:07:17,440 Speaker 2: the European Parliament to make that happen, and I'm very 125 00:07:17,480 --> 00:07:20,200 Speaker 2: confident that when the new Commission is but in place 126 00:07:20,640 --> 00:07:23,560 Speaker 2: within a matter of months, we'll see signs of ambition 127 00:07:23,640 --> 00:07:24,480 Speaker 2: to make that happen. 128 00:07:24,680 --> 00:07:27,280 Speaker 1: Would Michael McGuire or former counterpart in the Department of 129 00:07:27,280 --> 00:07:29,000 Speaker 1: Finance be a good candidate for that job. 130 00:07:30,080 --> 00:07:33,280 Speaker 2: Michael would be a great candidate for a job like that, 131 00:07:33,400 --> 00:07:35,840 Speaker 2: and would be a great candidate for any senior role 132 00:07:36,200 --> 00:07:41,000 Speaker 2: within the Commission. Michael has been an excellent minister here 133 00:07:41,000 --> 00:07:47,720 Speaker 2: in Ireland, has made a really strong difference to the 134 00:07:47,800 --> 00:07:52,280 Speaker 2: economy and has done so now in two different senior 135 00:07:52,360 --> 00:07:56,120 Speaker 2: roles within the Government of Ireland. And I'm very confident 136 00:07:56,240 --> 00:07:59,800 Speaker 2: that in that portfolio or any other senior one, that 137 00:08:00,000 --> 00:08:03,560 Speaker 2: Michael would have a very positive impact on the performance 138 00:08:03,600 --> 00:08:07,480 Speaker 2: of the European Union. And I of course, on a 139 00:08:07,520 --> 00:08:09,960 Speaker 2: personal and national level, would love to see that happen. 140 00:08:10,200 --> 00:08:13,160 Speaker 1: Just another international issue that's facing the Euro Area economy 141 00:08:13,240 --> 00:08:16,800 Speaker 1: or could potentially if there's another Donald Trump presidency, if 142 00:08:16,800 --> 00:08:19,600 Speaker 1: that were to materialize after November's election, Do you see 143 00:08:19,640 --> 00:08:21,920 Speaker 1: that as a being risk to the Euro Area economy 144 00:08:21,920 --> 00:08:24,000 Speaker 1: in terms of tariffs. 145 00:08:23,720 --> 00:08:26,680 Speaker 2: That risk is there. It's up to, obviously to the 146 00:08:26,720 --> 00:08:29,840 Speaker 2: American people to decide who they want as their next president. 147 00:08:30,480 --> 00:08:35,600 Speaker 2: But Donald Trump has outlined a very different agenda with 148 00:08:35,720 --> 00:08:39,000 Speaker 2: regard to tariff levels and with regard to trade. But 149 00:08:39,080 --> 00:08:41,320 Speaker 2: as America is deciding what they want to do with 150 00:08:41,440 --> 00:08:44,640 Speaker 2: regard to that, it's why it's so important that we 151 00:08:44,760 --> 00:08:47,839 Speaker 2: here in Europe take our steps to look at how 152 00:08:47,840 --> 00:08:50,960 Speaker 2: we can deepen our own economic foundations to deal with 153 00:08:51,040 --> 00:08:53,920 Speaker 2: that kind of change where it to happen in the US. 154 00:08:54,800 --> 00:08:58,600 Speaker 2: I believe the relationship between Europe and the US is 155 00:08:58,640 --> 00:09:02,560 Speaker 2: one that is important on so many different levels for 156 00:09:02,679 --> 00:09:05,400 Speaker 2: both sides of the Atlantic. But I also believe that 157 00:09:05,440 --> 00:09:08,840 Speaker 2: here in Europe we need to continue to deepen our 158 00:09:08,880 --> 00:09:13,600 Speaker 2: own economic autonomy, to deepen the performance of our economy 159 00:09:13,640 --> 00:09:16,600 Speaker 2: and the strength of our economy here in Europe, so 160 00:09:16,640 --> 00:09:19,800 Speaker 2: that we're in a stronger position to deal with the 161 00:09:19,880 --> 00:09:22,320 Speaker 2: kind of changes that make them out of America. So, 162 00:09:22,400 --> 00:09:26,240 Speaker 2: of course it's a really serious issue that could develop 163 00:09:26,280 --> 00:09:29,840 Speaker 2: across next year, but we here in Europe, I'm confident, 164 00:09:30,160 --> 00:09:33,480 Speaker 2: will be well positioned to be able to continue to 165 00:09:33,520 --> 00:09:36,199 Speaker 2: develop the relationship with the US, but to do with 166 00:09:36,280 --> 00:09:39,280 Speaker 2: in a way that from a European perspective is stronger. 167 00:09:39,480 --> 00:09:41,439 Speaker 1: In your role as a minister in the Irish government, 168 00:09:41,559 --> 00:09:44,240 Speaker 1: is it a particular concern for Ireland given the number 169 00:09:44,280 --> 00:09:46,280 Speaker 1: of US multinationals based in the country. 170 00:09:46,480 --> 00:09:49,000 Speaker 2: Of course, it's something we need to monitor here in Ireland, 171 00:09:49,000 --> 00:09:51,880 Speaker 2: and of course it's an issue that we are aware 172 00:09:51,920 --> 00:09:54,640 Speaker 2: of in terms of changes that could happen from an 173 00:09:54,640 --> 00:09:58,600 Speaker 2: American trade perspective and a differing view they may develop 174 00:09:59,120 --> 00:10:03,319 Speaker 2: regarding foreign direct investment in the years ahead. But all 175 00:10:03,360 --> 00:10:06,160 Speaker 2: I would say, Stephen is the companies that we've had 176 00:10:06,280 --> 00:10:10,120 Speaker 2: located here in Ireland, and in particular American companies have 177 00:10:10,200 --> 00:10:13,800 Speaker 2: been here for many, many decades, and we've developed very 178 00:10:13,840 --> 00:10:18,000 Speaker 2: strong relationships with them, and I'd certainly be very confident 179 00:10:18,400 --> 00:10:21,600 Speaker 2: that we're able to maintain those relationships and maintain their 180 00:10:21,600 --> 00:10:23,200 Speaker 2: strength in the years ahead.