On 26 November 2018, Mario Draghi answered questions of the Committee on Economic and Monetary Affairs ECON within the framework of the monetary policy dialogue. In doing so, he established that the economic indicators of the Eurozone in the 3rd quarter 2018 were slightly weaker than forecast. In the last quarter, GDP increased by 0.2 %; the two previous quarters still recorded 0.4 %. He names weaknesses in international trade as one reason for the decline.

Overall, economic growth should be 2 % in the current year; for the next two years he forecasts a slight reduction to 1.8 % for 2019 and 1.7 % for 2020. He refers to the risk of increased protectionism in the global market, which has an inhibitory effect on economic growth, but also on the situation in some newly industrialized countries and on the volatility in financial markets.

The labour market will continue to recover, however, not as fast as one had hoped; the reason for this being a Europe-wide lack of skilled workers. Unemployment figures fell to 8.1 % in September 2018, which is the lowest since 2008. Both the employment rate and the average household income, which are of key importance for the internal market demand, are developing positively.

Regarding the discussion on the reform of the Economic and Monetary Union, Mario Draghi declares that the path towards the general integration of the EMU shall be continued. Whilst the monetary policy has been Europeanised by the Common currency and the ECB, the important parts of the economic policy continue to remain within the competence of the Member States. Even though the necessary framework was in place, for example in view of the Financial Market Authority, he is demanding further steps: for example, national economic policies shall be better coordinated to exclude national causes. Member States had to continue to abide by the jointly agreed rules. In this context, he also refers to the European Semester and the reform proposal shown therein in order to improve the alignment of the different strengths of national economies.

Apart from that, he emphasises the significance of the European Stability Mechanism (ESM), which shall guarantee the solvency of overindebted Member States and ensure that these are better prepared for crises. Finally, from Draghi’s point of view it is necessary to complete the Banking Union in order to strengthen the financial sector.

From the point of view of the Chamber of Labour, a further deepening of the Economic and Monetary Union can only be supported when social problems are addressed effectively. This includes above all the fight against (youth) unemployment, which is still high in many countries and the growing inequality – both between Member States as within individual countries. In order to reduce these difference, one needs effective measures against wage and social dumping, the implementation of the Golden Investment Rule, stronger wage policy coordination and a greater reduction of imbalances regarding the trade balances individual Member States. Focussing on the implementation of country-specific recommendations, which, in the case of Austria, demand among other to raise the retirement age, are definitely not the right approach.

Further information:

AK Position Paper on the deepening of the Economic and Monetary Union

AK EUROPA: What is next for the Eurozone? New proposals after meeting of German-French government ministers in Meseberg

AK EUROPA: Reflection Paper of the Commission: Deepening of the Economic and Monetary Union