Dragoš Pislaru (Romania), Member of Renew Europe and Chairman of the Parliament’s Committee on Employment and Social Affairs, and Ludek Niedermaiers (Czech Republic), Member of the PPE Group and Vice-Chairman of the Committee on Economic and Monetary Affairs, spoke live on social media on 23 November to discuss solutions to the cost of living crisis. affecting most of Europe.
Finding the right approach to inflation
L. Niedermayer said the main problem is “wicked” inflation, which eats away at real incomes and reduces demand. “It is quite certain that we will experience a slight economic downturn, but unfortunately this is almost inevitable if we want to control inflation.”
Noting that the inflation rate in EU countries ranges from 5% to 20%, L. Niedermayer pointed out that the differences are explained by how strong the national economy is after the pandemic and different approaches to reducing inflation.
Some governments have decided to reduce energy taxes, and L. Niedermaiers evaluates this as a correct approach; others have introduced a temporary ceiling on energy or food prices, but this, according to the MP, does not prevent the risk of inflation after the ceiling is lifted.
The deputy admits that due to the different approaches, it is very difficult for the European Central Bank, which manages the monetary policy in the Eurozone, to react properly. “But now we can see that the monetary policy should be stricter,” added L. Niedermayer.
“The work of the central bank is very delicate – the goal is not to go from very high inflation to negative, but to be in a low inflation zone.” The MEP representing the Czech Republic pointed out that the fiscal policy of national governments and the monetary policy of the ECB should be closely related to each other in an effort to reduce inflation.
Although L. Niedermayer supports targeted support for companies and households, he also warns against “very broad support measures, which are expensive and can cause inflation”.
Support for vulnerable persons and continuation of reforms
“Vulnerable people could have – or already do – have to choose between paying the bills or providing a decent meal for their children,” Dragos Pislaru said. He added that people belonging to the middle class can also afford to spend less. “This is really a major social crisis.”
The chairman of the social affairs committee called for an “active labor market policy to ensure that people do not lose their jobs (..) and that we can help people to improve their skills or retrain”.
He said programs should be offered to small businesses similar to those developed during the Covid-19 pandemic to ensure jobs are preserved even in the event of temporary closures.
D. Pislaru pointed out that European funds and initiatives can help soften the impact of the crisis, and cited the plan as an example REPOWEREUwhich aims to reduce the EU’s dependence on Russian fossil fuels by investing in clean energy and diversifying supply.
“This should mean that we will be able to do two things at the same time: on the one hand, to promote the green transition, and on the other hand, to reduce the dependence of EU citizens on the instability of the energy market,” he said.
D. Pislaru pointed out that the EU’s post-pandemic recovery plan is aimed at providing support for reforms and investments implemented by countries. “The recovery and resilience plans are now kicking in, REPOWEREU is aimed directly at residents, and other measures have been adopted to invest in energy supply and reduce demand. This will be Europe’s reaction.”
“EU policy should not mean handing out “helicopter money” and spreading populist promises or nationalist ideas (..). It is necessary to rely on the ability of the population to work together and emerge stronger from each crisis. Our proposed long-term solutions, reforms and investments will help us overcome the inflationary crisis,” concluded D. Pislaru.
