Pandemic threatened ‘very economic fabric of the European Union’ – Donohoe

The Finance Minister praised the EU’s handling of the issue and said the same spirit is needed to tackle the soaring cost of living.

The coronavirus pandemic threatened the “very economic fabric of the European Union”, Finance Minister Paschal Donohoe has said (PA) (PA Media)

The coronavirus pandemic threatened the “very economic fabric of the European Union”, Finance Minister Paschal Donohoe has said.

Mr Donohoe praised the bloc for its handling of the challenge, which he said posed “the gravest of consequences for our future”, and said the same spirit is needed to tackle the soaring cost of living.

Mr Donohoe was speaking in his role as President of the Eurogroup on a discussion on the future of the eurozone in Madrid on Monday.

He said it is important to look at the challenges of inflation and public debt in the context of what had been overcome during the pandemic.

“That very broad perspective, for me, is a protection of employment and protection of income in the face of a deadly threat that our peoples have had to confront over the last two years” he said.

He said “if you look at where we have stood at different points” of the pandemic, officials “looked at the possibility of the very economic fabric of the European Union” coming under the most intense pressure – “with the gravest of consequences for our future”.

He said: “And we responded to that challenge.

The recovery funds, concepts like that, would have nearly been impossible a few years ago. Now they're happening

Paschal Donohoe

“While we do have new issues and new challenges that we have to overcome, I think as we debate those we should do it in the context of also acknowledging what we’ve achieved over the last two years.”

Mr Donohoe said some measures taken during the pandemic would have been unthinkable before Covid emerged.

“The recovery funds, concepts like that, would have nearly been impossible a few years ago. Now they’re happening,” he said.

“So that’s the spirit in which I look at the new challenges which we are now confronting.”

Mr Donohoe said he understands the frustration at the rising cost of living for people after a difficult two years, and said the EU must rise to the challenge.

“In relation to where we are with inflation, I know for so many across Europe at the moment who have just worked through the trauma of maybe getting a job back, maybe keeping a business open, to now have to confront the change in the price of the standard of living is another challenge on the top of two years of lots of challenges,” he said.

“But, again, as policymakers, whether we’re finance ministers or those in the central banking community, we really understand the challenge this poses for citizens and for our recovery.

“And that is why at a budgetary level we’ve all taken steps to support citizens with this rising cost of energy in particular.

“At the European Union we are working together to see what we can do to better deal with these challenges in the future and to reduce some of the effects that we are discussing.”

He added: “There’s many that thought we couldn’t overcome the challenges of the last two years. They’re not overcome yet but I think we’ve done well.

“And that same spirit will guide us into the issues that you’re raising there.”