Eurogroup to discuss impact of Ukraine war on economic outlook, housing, digital euro and banking union

The Minister for Finance and President of the Eurogroup, Paschal Donohoe, T.D., will chair the Eurogroup meeting in Luxembourg today (Monday). He will also attend ECOFIN on Tuesday 05 April

April 4, 2022 - 06:36

Eurogroup to discuss impact of Ukraine war on economic outlook, housing, digital euro and banking union

Estimated reading time: 4 minutes

The Eurogroup will discuss the economic impact of the war in Ukraine, specifically prospects for growth and inflation on the euro area. This discussion will feed into preparations for Ireland’s Stability Programme Update (to be published in April) in advance of the Commission’s spring economic forecasts. In addition, Minister Donohoe will intervene on behalf of the Eurogroup in the exchange of views with the Ukrainian finance minister, Serhiy Marchenko, organised by the French Presidency at the ECOFIN meeting on Tuesday.

Housing market developments across the euro area also features on the Eurogroup agenda. House prices have shown an unceasing increase across many euro area countries over the last decade, including in Ireland. There are many economic and social implications including housing affordability. The discussion will provide an opportunity for ministers to learn from their respective country experiences and discuss policy options in relation to both housing affordability and supply and demand issues. From an Irish perspective, Minister Donohoe will outline to his colleagues detail of ‘Housing for All’ – the Irish Government’s multi-annual, multi-billion euro plan to improve our housing system and deal with challenges associated with housing affordability. The plan focuses on increasing the annual supply of housing by two-thirds (from 20,000 to 33,000 homes, p.a.) whilst also building more social and affordable homes including the introduction of cost-rental homes to the market.

Ministers will also continue discussions on the possible introduction of a digital euro, focusing this time on trade-offs in the design of a digital euro between privacy and other policy objectives, in particular the fight against money laundering and terrorist financing. This is part of a series of scheduled discussions at Eurogroup on the digital euro project.

In banking union format, the Eurogroup will hear from the ECB Single Supervisory Mechanism and the Single Resolution Board on the operational aspects of the banking union, in particular as regards the health of the banking sector and recent banking cases. Minister Donohoe will also outline his plans to proceed on a work plan to complete Banking Union, with a specially dedicated Eurogroup videoconference scheduled for early May.

On the margins of the Eurogroup meeting, Minister Donohoe will meet with the Finance Minister of Luxembourg, Yuriko Backes.

Speaking ahead of the meeting, Minister Donohoe stated:

“I look forward to further engagements at Eurogroup on the impact of the Ukraine war on the euro area economy. Uncertainty levels remain extraordinarily high and there are clear pressures from both inflation and broader supply chain issues. However, the euro area has entered this crisis from a position of strength with robust growth and record low unemployment. Therefore, we expect the euro area economy to remain resilient despite weaker growth prospects.

Housing market developments will also feature in our discussions today. Reduced housing affordability affects consumption and investment. It also has profound implications for intergenerational equity, primarily affecting new – and mostly young – households. Given how relevant this issue has become in several euro area countries, including Ireland, I have decided that it was warranted to discuss this matter at the Eurogroup.”

Source: Department of Finance