The EU’s economic system needs structural change and must be adjusted to become more resistant to future external shocks, says the European Economic and Social Committee (EESC).
The Brussels based organisation is now recommending establishing a “Green triple-T” criterion to assess future interventions in the EU’s economic system, so that adopted measures are unquestionably tailored, targeted and transition-proof.
Aiming to build on the recommendations of the European Central Bank (ECB), the Committee stresses that untargeted price measures would only prolong the period of elevated inflation in the longer run.
The Committee says that delaying phasing them out might compromise the ECB’s ability to achieve its medium-term objectives, resulting in monetary tightening for longer than is otherwise desirable.
According to the EESC opinion, drawn up by Alena Mastantuono and adopted at the June plenary session, the European Union needs to move beyond emergency fiscal responses and focus on structural changes to allow it to decouple from fossil fuels more quickly.
“We are convinced that the lessons learned from the negative effects of the energy crisis on the EU’s economic performance must be reflected in the next policy steps,” said Mastantuono.
To ensure its smooth and competitive economic development, the EU needs reliable and secure deliveries of affordable energy based on an integrated energy market with a large share of clean energy, which is resilient and able to face disruptions and shocks.
More generally, the EU lacks a long-term framework for robust financing for implementing the Green Deal and the EESC asks for an adequate framework in order to support measures financing the transition to a climate-neutral economy in a simple and efficient manner.
The energy crisis revealed and identified some of the substantial weaknesses and disruptions in the EU economic system. Its impact on people’s lives and business prosperity is still ongoing and this makes it difficult to measure its final overall impact on the economy.
High inflation was the most visible phenomenon of the 2022 economic performance, with a knock-on effect on other elements of the consumer basket and a strong impact on consumption and behaviour.
The very high level of bankruptcy declarations in the EU also shows the seriousness of the situation. For many the situation is financially unsustainable and adds to the already weakened situation created by the COVID-19 pandemic.