Europe’s ‘mountain of investment’ should not come at the expense of its social model, Paolo Gentiloni tells Euronews
By Euronews Brussels bureau
Europe’s economy is out of the woods but still can't see the end of the tunnel.
That’s how Paolo Gentilon, the European Commissioner for the economy, describes the outlook for 2023, a new kind of normal where the European Union appears to have learned how to grow, even moderately, while a brutal war rages on its doorstep.
“Last autumn, we were estimating a much worse situation where we had some concern on energy supply, even thinking of possible blackouts. And a lot of concern about the possibility of a recession and bankruptcies,” Gentiloni told Euronews on the sidelines of the Brussels Economic Forum.
“We were able to manage the energy crisis. Prices are going down to the pre-war level. And we have a very strong and positive labour market. So, the concern about bankruptcy and waves of unemployment are not at all materialising. At the same time, we know that growth is subdued. Inflation is declining but is still persisting. So, this is why I'm saying (it is) better than expected, but still uncertain.”
Gentiloni was speaking to Euronews almost at the same time as President Christine Lagarde announced the European Central Bank was raising interest rates by a quarter-point. While economists agree that a continued rise in interest rates is the necessary pain to bring down stubborn inflation, some analysts have become concerned about a possible backfire effect.
“Of course, the tightening of financing could have consequences. We already see some tightening in the condition of financing and of credit,” said Gentiloni about the ECB’s decision.
“It’s a fine balance to keep. And I'm sure that our monetary authorities will keep this balance in mind.”
In his capacity, Gentiloni is spearheading a far-reaching transformation of the European economy that is meant to thrust the EU into a digitalised climate-neutral future. The ambitious goal comes with an eye-popping price-tag: the European Commission estimates the bloc will need €650 billion in additional investments on an annual basis until, at least, 2030.
Will the expensive undertaking make leaders forget about Europe’s welfare model?
“It has to be compatible. I don't think we have an alternative. Our social model proved to be quite effective and strong. We passed through two historical crises: the pandemic’s health dimension and the pandemic’s economic dimension. And in both aspects, I think our social model proved to be effective,” Gentiloni said.
“We need a mountain of investment, but not at the expense of our social model.”
Also at the Brussels Economic Forum was Nadia Calviño, Spain’s deputy prime minister in charge of the economy and digitalisation, who voiced a similar message of inclusivity: Europe must ensure that “nobody is left behind” if it wants to preserve its “European way of life, our social-market approach.”
“This is probably one of the key challenges we have going forward: how to ensure that we are leading these transitions, the twin digital and green transformation, that we are leading them from a technological point of view and that we accelerate the process and take care of those that are affected: sectors, regions or persons” Calviño told us.
Calviño said the digital transition required not only tonnes of investment but also adequate regulation to offset the most undesirable effects that stem from the online world.
“Regarding the digitalisation process, which is really unstoppable, we need to ensure that we have a legal framework in place which provides for the European approach to digitalization, protecting our European values and rights,” Calviño said.
“This is the best way to ensure that digitalisation is acceptable to our societies and that it is sustainable in the mid to long run. So, working in parallel on the technological drive and on the digital rights side, I think is essential if we want to ensure that this digital transformation is for the better and improves our societies and our world.”
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