Tuesday

6th Dec 2022

EU to push US for lower energy consumption

  • Luxembourg leader Juncker wants "a frank word" with the Americans (Photo: Luxembourg EU Presidency)

EU finance ministers have suggested that part of the blame for the current oil price crisis lies with the US, saying Americans should do more to save energy.

The prime minister of Luxembourg, Jean-Claude Juncker, who heads the so-called 12-nation group of countries that adopted the euro, said on Saturday (12 September) at an EU finance ministers' meeting in Manchester that the EU expects clear moves from Washington toward energy use reduction.

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"We will use our G7 meetings in Washington in two weeks to have a frank word with our American colleagues", Reuters quotes Mr Juncker as stating.

Mr Juncker also said that if oil prices remain high, growth expectations for the eurozone for this year should be cut to one percent instead of the previously projected 1.3 percent.

Mr Juncker’s gloomy projections follow last week’s more upbeat analysis from the European Commission, which believes that the effects of the oil crisis are limited.

A commission spokeswoman said on Thursday that the effects on growth were likely to be limited as "in the last 30 years we have become much less dependent on oil".

The ministers discussed strategies to cope with the mounting oil crisis, with world prices currently standing at nearly 70 dollars a barrel.

Member states agreed to call upon OPEC, the cartel of oil producing countries, to step up production, while strengthening ties with oil suppliers Russia and Norway, it emerged from the talks.

UK finance minister Gordon Brown said that "this global problem needs global solutions" adding that oil demand could rise by 50 percent in the next 20 years in the light of emerging markets in Asia.

Unilateral moves by member states

German daily Die Welt reports that during the Manchester talks, finance ministers clashed on member states taking unilateral action to alleviate the pressure on their economies stemming from the high prices.

Belgium, the Netherlands and Poland have announced tax cuts, while France reportedly succeeded in forcing oil firms Total and BP to cut prices at the pump.

Paris had last week threatened to punish oil firms with extra taxation if prices were not slashed.

The European Commission last week warned member states against taking individual action, saying this could lead to unwanted cross-border effects.

German deficit to hit 4 percent

Meanwhile, German media report that Germany’s budget deficit may hit 4 percent of GDP this year – instead of the 3.7 percent previously reported by the government.

The Austrian finance minister told journalists on Friday that Berlin’s deficit for 2005 would stand at 3.9 to 4 percent, based on "objective figures by the [European] commission".

Although the commission declined to confirm Mr Grasser’s statements, monetary affairs commissioner Joaquin Almunia had earlier told French business paper La Tribune that Berlin had submitted "very worrying figures", according to FAZ.

However, Mr Grasser’s remarks were described by the German finance ministry on Friday as "speculation".

German media note that the commission looks set to re-open an "excessive deficit procedure" against Berlin, as it will break the EU stability and growth pact for the fourth consecutive year.

The stability pact stipulates that member states are no allowed to run budget deficits of 3 percent or more.

After initial promises to cut its budget, the commission had suspended the proceedings against Germany in November 2003.

But if Brussels re-opens the process, Berlin faces a financial penalty of up to €10 billion.

ECB says more rate hikes to come

European Central Bank president Christine Lagarde said more rate hikes will come, but also admitted a recession will not lower inflation — leaving some economist question the logic of the policy.

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