Unlocking the potential of the euro area’s economic landscape: a keynote address by the President of the Eurogroup

Tuesday 12 March 2024, the School of Public Affairs and the Paris School of International Affairs welcomed Minister Paschal Donohoe, President of the Eurogroup, the mensual meeting of the finance ministers of the Euro area member states, that ensure the coordination of their economic policies. He is the Minister for Public Expenditure, National Development Plan Delivery and Reform of Ireland. 

The conference, moderated by Professor Francesco Saraceno, Economist and Deputy Department Director at OFCE-Sciences Po, first focused on Europe's responses to the crises of recent years and its resilience to shocks. 

With three months to go before the european elections, Minister Paschal Donohoe drew up an overview of Europe's challenges during the ending legislative cycle. In the space of five years, Europe has had to cope with a pandemic, a war and a very high level of inflation, leading to a cost of living crisis. Europe reacted with unity and solidarity in this context, whether with the vaccines against COVID-19 and the recovery and resilience funds (750 billion euros), the assistance to Ukraine (88 billion euros), or the support to households and businesses (1.6% of GDP of the Euro area). Economic policies, whether budgetary or monetary, have been coordinated, and thanks to these measures, which have included tax decisions, social welfare support, subsidies and interest rate rises, the Eurozone economy has managed to grow despite the crisis. The EU has maintained a strong labour market, with the unemployment rate at an historic low (6% in January 2024), and has managed to bring inflation down from 8.5% a year ago to 2.6% in February 2024. 

After drawing up this assessment, Minister Donohoe shared his views on the future of financial and economic reforms in Europe and the Eurozone, placing them in a long-term perspective. 

He detailed the three priorities that guide the work of Eurogroup member ministers: 

• Coordination, the common work directed to ensure economic policy consistency and growth, and to restore public finances to a sustainable level by reducing the deficit (from 3.6% in 2022 to less than 3% this year). He evoked the ambitious reforms to come of the economic framework of EU governance, and shared his predictions for the Eurozone's economic indicators: GDP should reach 1.5% in 2025. 
• Competitiveness, the reinforcement of the eurozone's position in the global economy, with particular emphasis on the development of European capital markets to guarantee access to capital for businesses. 
• The future of our currency, in a perspective of enlargement of the Euro area, and the conviction that the euro is at the heart of the Eurozone economic security and financial stability. 

After the presentation, a large part of the conference was devoted to rich discussions with Sciences Po students, during which Minister Donohoe exposed his vision of the future of the Eurozone. 

He shared his hope that within 50 years, the euro would become a globally recognized currency for the green transition, in the way the dollar was the reference currency for oil. After presenting access to clean energy as an issue of economic security, he gave his view on the feasibility of decoupling, depending on how carbon is priced, and how energy is sourced, and on the importance of making this decoupling scale as large as possible as a politician. 

Minister Donohoe also answered questions surrounding the possibility of developing common borrowing for Europe and the ongoing work on the OECD international tax agreement including implementing a minimum effective tax rate up to 15% and allocating taxing rights.

Throughout the conference, he constantly reaffirmed his belief in the economic potential of the European Union, while giving an overview of the work of the Eurogroup, which is to respond to the challenges of today, while designing the Europe of tomorrow, a Europe at the forefront of green transitions and digitalisation. 

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