Economic and Financial Affairs

But Russia's invasion of Ukraine has posed new challenges, just as the Union had recovered from the economic impacts of the pandemic. By exerting further upward pressures on commodity prices, causing renewed supply disruptions and increasing uncertainty, the war is exacerbating pre-existing headwinds to growth, which were previously expected to subside. This has led the European Commission to revise the EU's growth outlook downwards, and the forecast for inflation upwards. Nonetheless, EU GDP is projected to remain in positive territory over the forecast horizon, thanks to the combined effect of post-lockdown re-openings and the strong policy action taken to support growth during the pandemic. Real GDP growth in both the EU and the euro area is now expected at 2.7% in 2022 and 2.3% in 2023, down from 4.0% and 2.8% (2.7% in the euro area), respectively, in the Winter 2022 interim Forecast. The growth projection for this year may appear benign relative to the size of the shock generated by the war. However, as much as 2 percentage points of this growth is due to the exceptionally strong rebound of last year. Net of this so-called “carry-over effect”, within-year growth for 2022 has been cut from 2.1% to 0.8%. Risks to the forecast for economic activity and inflation are heavily dependent on the evolution of the war, and especially on its impact on energy markets.

Participants at this year's Forum included, amongst many others, United States Secretary of the Treasury Janet Yellen, European Commission’s Executive Vice-President Valdis Dombrovskis, Commissioners Paolo Gentiloni and Nicolas Schmit, First Deputy Managing Director of the International Monetary Fund (IMF) Gita Gopinath, and Third Vice-President and Minister for Ecological Transition and Demographic Challenge of Spain Teresa Ribera. To mark 2022 as the European Year of Youth, this year’s Forum focused on what the economy of the next generation should look like. Award-winning young economists joined high-level speakers from across the world to discuss new ideas on how we can build a fair, green and digital economy for the future. Recordings of the event are available to view here.

The Communication follows from the European Council call to address the consequences of the war in Ukraine via a dedicated Europe-led effort. The war has resulted in a collapse of tax, export and other revenues, compounded by large-scale illegal appropriation of assets and export goods including in the agricultural sector, while essential expenditure has skyrocketed. The International Monetary Fund has estimated Ukraine's balance of payments gap until June at roughly €14.3 billion ($15 billion). In addition to the €4.1 billion already mobilised to support Ukraine's overall economic, social and financial resilience, to address Ukraine's significant short-term financial needs, the Commission envisages to propose granting Ukraine in 2022 additional macro-financial assistance in the form of loans of up to €9 billion, to be complemented by support from other bilateral and multilateral international partners, including the G7. To support Ukraine’s long-term reconstruction, the Commission proposes establishing an international coordination platform, the ‘Ukraine reconstruction platform', co-led by the Commission representing the European Union and by the Ukrainian government, that would work as an overarching strategic governance body, and be responsible for endorsing a ‘RebuildUkraine’ reconstruction plan. To support the reconstruction plan, the Commission would set up the ‘RebuildUkraine' Facility as the main legal instrument for the EU’s support, through a mix of grants and loans.

Croatia submitted a payment request to the Commission on 15 March 2022 for the first instalment, based on the 33 milestones and one target identified in the Council Implementing Decision. The milestones and target cover reforms and investments in the areas of health, social policy, adult education, public administration, anti-corruption, audit and control, anti-money laundering, transport, water and waste management as well as the energy efficiency of buildings. With their request, the Croatian authorities provided detailed and comprehensive evidence demonstrating the satisfactory fulfilment of the 33 milestones and one target. The Commission has now sent its positive preliminary assessment of Croatia's fulfilment of the milestones and targets required for this payment to the Economic and Financial Committee (EFC), asking for its opinion. Following the EFC's opinion, the Commission will adopt the final decision on the disbursement of the financial contribution, after which the disbursement to Croatia would take place.

In front of an audience composed, among others, of Portuguese national and local authorities, MEPs and MPs, as well as EU Ambassadors and other members of the diplomatic corps, Commissioner Ferreira announced the disbursement of the first payment of €1.16 billion (excluding pre-financing) to Portugal under the Recovery and Resilience Facility (RRF), made up of €553.44 million in grants and €609 million in loans. Payments made to Portugal under the RRF are performance-based and depend on the implementation of the investments and reforms described in Portugal's recovery and resilience plan. On 25 January 2022, Portugal submitted a first request for payment to the Commission of €1.16 billion under the RRF covering 38 milestones and targets. These concern reforms and investments in the areas of health, social housing, social services, investment and innovation, qualifications and skills, forestry, the blue economy, bio-economy, renewable gases (including hydrogen), public finances and public administration. On 25 March 2022, the Commission adopted a positive preliminary assessment of Portugal's request for payment. The favourable opinion of the Economic and Financial Committee of the Council on the payment request paved the way for the Commission to adopt a final decision on the disbursement of the funds.

The Sustainable Maritime Infrastructure Fund aims to support the global maritime industry's transition to a carbon-neutral economy by 2050. This is in line with the European Green Deal's goal of net zero greenhouse gas emissions by 2050. With a total of 200 million euros raised, the fund has already reached more than half of the targeted volume to date. The total investment will help finance three main assets: ships equipped with environmentally friendly technologies that use more efficient or alternative fuels, innovative port equipment and infrastructure aimed at fostering the ecological transition, as well as assets that support the development of renewable energy at sea. So far, the Investment Plan for Europe has mobilized €546.5 billion of investment, benefiting more than 1.4 million small and medium-sized enterprises.

The EIB investment is backed by the European Fund for Strategic Investments, the main pillar of the Investment Plan for Europe. The new plant will partially replace some ageing manufacturing facilities and significantly expand the existing production capacity, whilst also adding a fourth production facility. It will, for instance, process milk from its cooperative members into high value-added dairy products such as hard and semi-hard cheese (gouda and cheddar) and pasteurised cream. The investment will also support sustainable agriculture. The company promotes sustainable animal rearing among its cooperative members, who are its milk suppliers. Furthermore, the company implements a zero-net carbon company programme, targeting zero net carbon emissions by 2040 and a reduction of 55% by 2030, including with its milk suppliers. The Investment Plan for Europe has so far mobilised €546.5 billion of investment, benefitting over 1.4 million small and medium-sized businesses.

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The Commission wants to gather stakeholders’ views on users’ needs and expectations for the digital euro and how to make it available for retail while preserving the legal tender status of euro cash.

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