Pascal Dona, Who, President of euro Group in Irelands, Minister of Public Expenditure, thank you for joining us. We've had a couple of days of huge market volatility, partly due to fears about a slowing economy in the US. How much of a concern is that to you and your colleagues and the Eurogroup.
So will continue to monitor developments that are taking place in America from Afar and this side of the Atlantic. It looks to us that we've seen in the American economy that has grown so strongly in the aftermath of the pandemic. It's had rates of growth, rates of employment growth that have been so impressive. It appears to me the outlook for the American economy will continue to be
strong and continue to be positive. But I know markets react very strongly to changes nuance and tone from policymakers. But certainly from our point of view, if we look at the recent performance of the American economy in terms of employment and outputs, it continues to look very positive and we think this ample opportunity for further trade and further positive economic engagement with the US if the politics continue to allow us.
Is there a risk from the strength of the US economy being detrimental to the Euro Area.
Well, there's always risks when we see really important trading partners have a change in their economic outlook. So whether it be America, whether the other parts of the global economy, if their economic outlook begins to change, of course that can have an effect, particularly on such an important trading partner as Europe as in America. But again I would just go back to the medium term outlook for the
American economy. It continues to look really positive. Their performance in the aftermath of the pandemic has been so strong in terms of employment growth and economic growth itself, and despite the volatility in markets in recent days, my own sense is that performance and that outlook continues to be there.
Part of the effect of the market termol, though, has been markets pricing in more rate cuts from the European Central Bank. Would further rate cuts be welcome in your viewer? Are they a signal of weakness in the Euro Area economy.
Well, that's the decision very much for the European Central Bank to make, and we always respect as Finance Minister as their independence in decisions they make. But I think their indication is that they believe we are going in broadly in the right direction with regard to inflation. That'll continue to monitor us and if that journey with inflation continues, that will have positive consequences then for decisions they make. I think that can only help where we are in
our ability to increase growth within Europe. And if I look at the project that we need to deliver here in Europe, it's about how we can improve our growth performance as we have been successful in getting inflation down and regardless of what happens in other parts of the world, Stephen, that's the journey that we need to continue on.
Well, one of the issues that you raised after the last YUR Group meeting in July was the issue of sustainable fiscal consolidation. Gradual and sustained was the language that you used. What was needed in the euro Area. What does that look like in practical terms.
What it looks like practically is the very big energy support measures that were in place in different national economies when inflation was so high that they need to be phased out and entirely removed. In twenty twenty five, we have across so many economies at the moment fiscal measures that were but in place true taxation and true expenditure with the aim of offsetting the impact of high energy pricing. As we have seen inflation come down and as we
have seen the cost of energy come down. Practically with that now means is those support measures that were in place that were meant to be temporary come to an end next year. And if they come to an end, that in turn will create the opportunity for deficits across the Euro Area in twenty twenty five to come down again. So that's the big practical next step that we need to deliver.
There's the political realities of that as well, though, and in countries like France, for example, where we're in sort of political stasis. Is it going to be possible for countries like France to achieve that aim? Are you worried about the French public finances?
So my view is if you look at the Euro Area budget outlook, and even if you look at the outlook of economies such as the French economy, I'm very confident in the stability of their public finances and the stability of the Euro Area overall. Of course, in order for a budget to be passed within the French Parliament, there needs to be a government in place, and there needs to be the policy consensus to implement that budget. And look, that work is underway, and I'm sure we'll
only intensify in the aftermath of the Olympics. But overall, I am very confident in the outlook of the euro Area deficits and our ability to manage that. And I also believe that in our bigger economy, such as the French economy, over time we will have the ability to see those levels of borrowing go back to a more normal place.
Do you see a risk though, that markets might not be as optimistic as you are in seeing that situation improving.
I accept that risk is there. We all understand that the financial markets monitor these developments very very closely. But we are in the early phase of the implementation of a new budget framework within the European Union that we've all signed up to deliver. I believe the commitment is there to deliver that, and as that is delivered, that
will lead to a gradual reduction in borrowing. But also we all appreciate this as something the financial markets do monitor and do respond back to in terms of the cost of borrowing. Because all finance ministers do recognize that that of itself will create a dynamic that allows borrowing across next year, in particular to come down gradually and to come down credibly.
One of the other European projects that we've spoken about before is the Capital Markets Union. The last time we spoke, he says, you weren't concerned about the results of the European elections delaying or hindering that process. What's your best hope now on a timetable for progress there as we're waiting for confirmation of the new European Commission that we.
See in new European Commission appointed, I hope shortly after the summer, and that what will then allow to happen is we will have a commissioner in place with particular responsibility for capital markets, and that new Commissioner in the early part of next year outlines a strengthened action plan regarding how we can accelerate progress on the development of
capital markets. So I believe a majority is there within the European Parliament to make that happen, and I'm very confident that when the new Commission is but in place within a matter of months, we'll see signs of ambition to make that happen.
Would Michael McGuire or former counterpart in the Department of Finance be a good candidate for that job.
Michael would be a great candidate for a job like that, and would be a great candidate for any senior role within the Commission. Michael has been an excellent minister here in Ireland, has made a really strong difference to the economy and has done so now in two different senior roles within the Government of Ireland. And I'm very confident that in that portfolio or any other senior one, that Michael would have a very positive impact on the performance
of the European Union. And I of course, on a personal and national level, would love to see that happen.
Just another international issue that's facing the Euro Area economy or could potentially if there's another Donald Trump presidency, if that were to materialize after November's election, Do you see that as a being risk to the Euro Area economy in terms of tariffs.
That risk is there. It's up to, obviously to the American people to decide who they want as their next president. But Donald Trump has outlined a very different agenda with regard to tariff levels and with regard to trade. But as America is deciding what they want to do with regard to that, it's why it's so important that we here in Europe take our steps to look at how we can deepen our own economic foundations to deal with that kind of change where it to happen in the US.
I believe the relationship between Europe and the US is one that is important on so many different levels for both sides of the Atlantic. But I also believe that here in Europe we need to continue to deepen our own economic autonomy, to deepen the performance of our economy and the strength of our economy here in Europe, so that we're in a stronger position to deal with the
kind of changes that make them out of America. So, of course it's a really serious issue that could develop across next year, but we here in Europe, I'm confident, will be well positioned to be able to continue to develop the relationship with the US, but to do with in a way that from a European perspective is stronger.
In your role as a minister in the Irish government, is it a particular concern for Ireland given the number of US multinationals based in the country.
Of course, it's something we need to monitor here in Ireland, and of course it's an issue that we are aware of in terms of changes that could happen from an American trade perspective and a differing view they may develop
regarding foreign direct investment in the years ahead. But all I would say, Stephen is the companies that we've had located here in Ireland, and in particular American companies have been here for many, many decades, and we've developed very strong relationships with them, and I'd certainly be very confident that we're able to maintain those relationships and maintain their strength in the years ahead.