Inflation risk and Pact reform at the Eurogroup, today Franco in Brussels

   The expensive energy and the surge in inflation, the revision of the Stability Pact, the ratification process of the Mes and the banking union: the work of the Eurogroup convened for today restarts from here, on the occasion of the first meeting of 2022 in Brussels under the presidency of the Irish Finance Minister Paschal Danohoe.

    The meeting - which will be followed on Tuesday by the Council of 27 EU Finance Ministers, Ecofin - is characterized by the debut of 4 ministers (Germany, Holland, Austria and Luxembourg) and is an opportunity to analyze the evolution economic recovery in light of the new wave of infections that Europe is trying to cope with by containing its impact on production activities. Economy Minister Daniele Franco is expected in Brussels to participate in the two meetings. Among other things, he must take stock of Italy's failure to ratify the Mes (politically divisive issue due to the critical position of M5S and Lega). Germany, France and Portugal are also missing. In Paris and Lisbon, however, the ratifications are in the pipeline,while Berlin to complete the procedure must wait for the ruling of the Constitutional Court of Kharlsruhe, which will arrive within a couple of months.

   The ratification of the Mes, Brussels sources recall, is not a fulfillment for its own sake, but is of particular importance for the establishment of that beckstop for the resolution of crises, which is indispensable for moving forward on the road to banking union. On the table of ministers there is once again the inflation dossier. Driven by expensive energy, the trend in consumer prices in the Eurozone recorded an increase of 5% in December (estimate not yet final), the highest level in the last 25 years. And although many, including the ECB, continue to consider this rise temporary, fears are growing about the impact that the phenomenon could have on interest rates and on citizens' pockets. And, while theimplementation of national NRPs goes on without major problems (at least at this stage and beyond the stops imposed on Hungary and Poland), ministers have the opportunity to have a new discussion on the revision of the Stability and Growth Pact. Listening in particular to what the new finance ministers of Germany, Christian Lindner, Holland, Sigrid Kaas, and Austria, Magnus Brunner will have to say.