Remarks by Commissioner Dombrovskis at the Eurogroup press conference

Thank you, Paschal. Good morning, everyone.

Its good to be back here in Copenhagen for these meetings as we look ahead and prepare for a particularly busy end of the year.

Let me begin with an update on the economic outlook.

Economic activity grew at a faster pace than expected in the first half of the year, especially in the first quarter, as investment and exports exceeded expectations.

For the year as a whole, we expect slightly higher growth than the 1.1% projected for the EU in the spring.

At the same time, growth momentum is set to slow down, but not reverse, in the second half of the year.

This reflects numerous headwinds – including, slower global trade growth, continued uncertainty and geopolitical turbulence.

Hence, our growth outlook for the next year has become somewhat weaker than it was when we published our Spring Forecast.

But, overall, the EUs overall economic foundations remain sound.

The labour market, in particular, remains robust.

We see wages going up and inflation going down.

This is good news for households and should continue to support consumption.

However, there are various risks to the outlook, so we cannot be complacent.

This underlines the urgency of taking decisive action to secure our prosperity and autonomy in the long-term.

This brings me to the next point.

I very much welcome the ambitious Eurogroup work programme, as presented by Paschal today, and look forward to working with ministers to implement it.

Let me briefly mention three elements from the Commissions perspective.

First, on coordinating fiscal and economic policy.

Safeguarding fiscal sustainability and simultaneously ensuring adequate spending for key priorities, especially security and defence, will remain a critical issue in the time head.

The Commission will help Member States in making these difficult policy choices, including through a credible implementation of the new economic governance framework.

Secondly, in view of recent economic developments, it has become even more important to discuss ways to enhance the euros role as an international and digital currency.

I will return to todays discussion on the digital euro in a moment.

More generally, however, we need to make progress on some long-standing work strands, such as the Savings and Investment Union and the Banking Union.

And finally, we need to work on enhancing Europes competitiveness.

As you know, competitiveness is a central focus of the European Commission.

Guided by our Competitiveness Compass, we have already made progress in turning the recommendations contained in the Draghi report into reality.

But more is needed and we need to work together to maximise impact.

In this case, I once again welcome the focus that the Eurogroups work programme is putting on this.

Turning now to the digital euro.

While we have seen slow but steady progress over the course of the last two years, there is now a growing urgency to reach political agreement and address the remaining open issues.

Today, we had a discussion on this and I am pleased to report that we made a significant breakthrough at todays meeting.

The Eurogroup, as Paschal said, reached a political agreement on the institutional framework for setting the ceiling for holding limits which ensures an appropriate role for both the Council and the ECB.

This agreement provides fresh momentum to efforts to reach a common approach in the Council by the end of the year.

Here, I would like to thank the Danish Presidency for their commitment in progressing this crucial file and reaffirm the Commissions commitment to providing all necessary support.

Finally, I also debriefed on the G7 finance ministers call in relation to increasing pressure on Russia for its aggression against Ukraine.

The European Union and its Member States have always shown strong leadership in the G7 format and in supporting Ukraine.

For example, no one has implemented stronger sanctions than Europe.

And they work, particularly as part of a coordinated G7 approach. 

G7 sanctions have already inflicted real costs on the Russian economy ranging in the hundreds of billions.

But it is clear that we must step up the pressure against Russia further to make its war of aggression unsustainable. 

In this spirit, the Commissions proposal for the 19^th sanctions package will aim to further weaken Russias already weakened war economy.

I expect you will hear details on this very soon.

Second, on the Reparations Loan.

As President Ursula von der Leyen announced in her State of the Union speech, it will be a limited-recourse loan to Ukraine funded by cash balances from immobilised Russian Central Bank assets.

This however would not affect Russias claim on the financial institutions holding those immobilised cash balances, which would remain fully in place.

But this loan would be repaid only if and when Ukraine receives reparations from Russia, so basically frontloading the reparations.

It is only right that Russia pays for the war it started.

We are now working on technical details addressing certain concerns and questions to build a legally, financially and fiscally sound instrument.

Importantly, it is also scalable at G7 level, and several G7 partners have shown interest in following a similar approach.

I will stop here.

Thank you very much.