France, Germany pledge unity to support economy against inflation

France, Germany pledge unity to support economy against inflation

German Finance Minister Christian Lindner and French Finance Minister Bruno Le Maire attend a press conference after Le Maire was awarded the Grand Cross of the Order of Merit of the Federal Republic of Germany at the Ministry of Finance in Berlin, Germany on July 25, 2022 REUTERS/Annegret Hilse/File photo

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PRAGUE, Sept. 9 (Reuters) – France and Germany on Friday pledged to act together to protect households and businesses from rising energy prices, while also using fiscal policies to combat record high inflation.

French finance minister Bruno Le Maire and his German counterpart Christian Lindner showed unity at the outset of talks before eurozone finance ministers in Prague, telling reporters they would work together on policy. read more

“It is a signal that France and Germany are starting this meeting together. It is a signal that we are standing shoulder to shoulder, not only here, but also in policy terms,” ​​Lindner said.

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The pledge comes a day after the European Central Bank (ECB) raised its key interest rates by an unprecedented 75 basis points and promised further hikes, prioritizing the fight against inflation, even as the bloc likely heads into a winter recession and rationing. of gas. read more

“As finance ministers, we also have to take our responsibilities,” Lindner said. “There has been a strong signal from the ECB to fight inflation. And so this is also our duty – to fight inflation through fiscal policy,” he said.

“We will protect our households from the impact of high prices. We must do the same for private companies, which are affected by high gas and electricity prices,” said Le Maire.

France, Germany and other countries have announced multi-billion-euro packages to help businesses and consumers cope with rising inflation. The think tank Bruegel estimates that EU public support has already reached 282 billion euros (285 billion dollars), with more to come. read more

But the support itself can fuel inflation, creating a vicious circle. Eurozone finance ministers will discuss how to coordinate policies to prevent this.

“Those are difficult discussions, but I am sure we will find a common solution that we need,” said Estonian Finance Minister Keit Pentus-Rosimannus.

EU energy ministers will also meet in Brussels on Friday to discuss a long list of proposals from the European Commission to tackle the region’s energy crisis, including a price cap for Russian gas, a windfall tax on non-gas plants, a lockdown scheme for widespread demand for electricity, and emergency lines of credit for utility companies faced with rising collateral requirements. read more

($1 = 0.9904 euros)

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