Outgoing EU Economic Commissioner Paolo Gentiloni said on Saturday that the EU had managed to avoid the “dire prophecies” that had threatened its economy in recent years but still had to deal with Russia’s war in Ukraine and fragile trade ties with China.
In an interview with CNBC, Gentiloni said that the EU economy “generally has weak growth, but there are no dire predictions that we have heard in the past two or three years: recession, blackouts, divisions, the division of Europe before the Russian invasion.” Steve Sedgwick at the Ambrosetti Forum in Cernobbio, Lake Como, Italy.
Gentiloni is a former Italian Prime Minister who has served as EU Economic Commissioner under European Commission President Ursula von der Leyen since December 2019. legislation (such as tariffs), while the European Commission is responsible for the economic strategy and legislation (such as tariffs) of the 20 euro area countries.
Gentiloni will not serve again as commissioner after von der Leyen’s chaotic re-election as president, but he has outlined the economic outlook that awaits his incoming successor.
“The economy is growing slowly, but still growing. The risk of divisions in the EU when the epidemic occurs is very limited,” he noted. “The bad part of this story is that if we don’t improve our capabilities in terms of competitiveness, if we don’t If we don’t address the defense challenge… If we don’t do that, then the new situation in the world will look very difficult for Europeans.
Europe, recovering from the Covid-19 pandemic, has been struggling with a cost-of-living crisis and a high-inflationary environment, exacerbated by energy supply constraints following Russia’s February 2022 invasion of Ukraine and sanctions on Moscow. The euro zone economy expanded in the first half of this year, with preliminary data showing that gross domestic product grew 0.3% in the three months to the end of June from the previous quarter, better than expected.
In its spring forecast, the European Commission predicts that the EU’s GDP will grow by 1% and the Eurozone’s GDP by 0.8% in 2024. The GDP of the two regions will grow by 1.6% and 1.4% respectively in 2024. Growth was fueled by broader geopolitical risks from ongoing conflicts in Ukraine and the Middle East.
Amid falling inflation, the European Central Bank took its first step in easing monetary policy since 2019 in June, cutting the central bank’s key interest rate to 3.75% from a record level of 4% since September 2023. The market has fully digested the impact of another interest rate cut at the upcoming meeting of the European Central Bank on September 12.
China relations
Looking ahead, Europe must now weather the twin storms of a close-fitting November election in the United States, its main trading partner, and friction in trade relations with China. The EU became Beijing’s target after it decided in June to impose higher tariffs on Chinese electric vehicle imports. ”.
Gentiloni stressed on Saturday that trade diplomacy with China and the war in Ukraine must be at the top of the list of challenges facing the new council and that they are more pressing than the emergence of the second U.S. administration under former President Donald Trump.
The EU must “support Ukraine and keep the door open to international trade” but also “give up our originality in our trade relations with China. But this does not mean that we can accept the idea of international trade and international trade rules” [are] It’s over,” Gentiloni pointed out.
He downplayed the impact of Trump’s victory in November on the economy, adding: “I think a change in the US government that means Trump wins the election will certainly not be popular in Brussels, but I don’t think this change will bring to have a huge impact.
wind of change
Gentiloni has yet to announce his next steps after leaving the European Commission at a time when Europe and its legislators face a wave of far-right support.
“When you take on one role, you should never organize your next one. But of course I will contribute to European affairs and maybe also to Italian politics and Italian affairs,” he said on Saturday .
The left-wing politician is unlikely to win the support of Italian Prime Minister Giorgio Meloni, who has nominated European Affairs Minister Rafael Fito of the right-wing Brotherhood of Italy party to the new European Commission.
The far right made real gains in recent European elections, with Hungary’s right-wing Prime Minister Viktor Orbán, who currently chairs the EU Council, questioning whether the Vander Leyen Commission would be appropriate given political sentiment.
“The core of the difficulty is this: the last Commission proved to be very unsuccessful in terms of the competitiveness of the European economy, migration, stopping the war, etc. So in general it was an unsuccessful Commission,” the Hungarian leader said people told reporters.
He added: “so i have [a] great faith [people] Can change and be able to deliver better performance than before. but [is is] It’s hard to think so. So I try to support the committee, but as a rational person I think we are ignoring the desire of our constituents for change and ignoring the same institutions [is] Still having a foothold in Brussels, that’s not good.
—CNBC’s Katrina Bishop contributed to this report.
