Wednesday

29th Mar 2023

Rising prices expose lack of coherent EU response

Listen to article

The increasingly sharp debate over the rising cost of living exploded in the European Parliament on Tuesday (5 July), with lawmakers from all stripes, liberal, left, green and conservative, calling on the EU to act.

"People are struggling to make ends meet, and we need action now," Agnes Jongerius, a lawmaker for the Socialists and Democrats, said. "I am urging the commission and the council to take the lead."

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Suggestions to tackle the outfall from inflation, which hit 8.6 percent in June, ranged from instituting a minimum wage, or capping the price of energy, to insulating homes and taxing windfall earnings from some electricity companies who have profited from turbulent prices.

On Tuesday, the EU Commission proposed using the remaining pandemic funds—some €200bn in unused loans—to speed up investments in renewables and energy efficiency measures like the isolation of homes.

This could effectively lower households' electricity and gas bills in the medium term but will not help the poorest deal with immediate financial troubles.

In normal circumstances, the institution in Europe tasked with maintaining stable prices is the European Central Bank.

Augustin Carsten, director of the Bank for International Settlements (BIS), the Basel-based supervisor of central banks, called on central banks to do everything in their power to stem inflation as soon as possible because rising prices were at risk of becoming "entrenched."

Most recent inflation can be traced back to surging energy costs and higher food prices, but a comprehensive BIS-report detailed how price rises are starting to spread across the economy.

But the ECB is limited in what it can achieve.

Its main tool to battle inflation is higher interest rates. Increasing the cost of borrowing will dampen economic activity and lower demand, eventually pushing inflation down.

But this comes at the cost of lower wages and unemployment, which will worsen the economic situation for the households and businesses lawmakers want the EU to protect.

"The ECB is entering this battle against inflation with one hand tied behind its back. A decade after the Euro crisis, our economic and monetary union is still deeply incomplete," liberal lawmaker Luis Garicano said, calling instead for joint European debt and a new pandemic-type European borrowing instrument.

"They do not have any long-term solution. This is a non-strategy of temporary fixes which is going to run out of road very soon," Garicano said.

A new meeting of heads of government and heads of state is now planned in October to address the issue of rising prices.

Analysis

ECB rate-setting versus green climate goals

Following the European Central Bank's unanimous decision earlier this month to end negative interest rates by September, nervous private investors and speculators immediately started selling their government bonds.

Analysis

An inflation surge, but (some) economists warn on raising rates

Rising prices have fuelled the debate among economists about inflation risk - with some arguing that central banks should increase interest rates, while others urge governments and central banks to adopt more precise and targeted measures.

EU approves 2035 phaseout of polluting cars and vans

The agreement will ban the sale of carbon-emitting cars after 2035. The EU Commission will present a proposal for e-fuels after pressure from German negotiators via a delegated act, which can still be rejected by the EU Parliament.

'Final warning' to act on climate change, warns IPCC

The United Nations's report — synthesising years of climate, biodiversity, and nature research — paints a picture of the effects of global warming on the natural world, concluding there is "no time for inaction and delays."

Opinion

Dear EU, the science is clear: burning wood for energy is bad

The EU and the bioenergy industry claim trees cut for energy will regrow, eventually removing extra CO2 from the atmosphere. But regrowth is not certain, and takes time, decades or longer. In the meantime, burning wood makes climate change worse.

Opinion

EU's new critical raw materials act could be a recipe for conflict

Solar panels, wind-turbines, electric vehicle batteries and other green technologies require minerals including aluminium, cobalt and lithium — which are mined in some of the most conflict-riven nations on earth, such as the Democratic Republic of Congo, Guinea, and Kazakhstan.

Latest News

  1. The overlooked 'crimes against children' ICC arrest warrant
  2. EU approves 2035 phaseout of polluting cars and vans
  3. New measures to shield the EU against money laundering
  4. What does China really want? Perhaps we could try asking
  5. Dear EU, the science is clear: burning wood for energy is bad
  6. Biden's 'democracy summit' poses questions for EU identity
  7. Finnish elections and Hungary's Nato vote in focus This WEEK
  8. EU's new critical raw materials act could be a recipe for conflict

Stakeholders' Highlights

  1. InformaConnecting Expert Industry-Leaders, Top Suppliers, and Inquiring Buyers all in one space - visit Battery Show Europe.
  2. EFBWWEFBWW and FIEC do not agree to any exemptions to mandatory prior notifications in construction
  3. Nordic Council of MinistersNordic and Baltic ways to prevent gender-based violence
  4. Nordic Council of MinistersCSW67: Economic gender equality now! Nordic ways to close the pension gap
  5. Nordic Council of MinistersCSW67: Pushing back the push-back - Nordic solutions to online gender-based violence
  6. Nordic Council of MinistersCSW67: The Nordics are ready to push for gender equality

Join EUobserver

Support quality EU news

Join us