Recession, Inflation, Stagflation? Insights from the ECB and fiscal policy dilemmas
Friday, 19 September 2023
Hello Future is blue readers,
Welcome to our newsletter about European economic affairs bringing together top experts from academia and think tanks to discuss the most pressing economic challenges of today. Future is Blue is promoted by Funcas.
The European Central Bank has raised interest rates to an all-time high in a bid to cool consumer prices, but signalled its cycle of increases may be nearing its end. The ECB’s decision to lift its deposit rate for the 10th consecutive time, by 25 basis points to 4 per cent, came as officials cut their growth forecasts for the eurozone economy.
In view of this important development, our new podcast episode explores the risks of the EU entering into recession, the monetary and fiscal policy dilemmas, and other issues that may shape the economy in the next few months. Don't miss our new show with Raymond Torres, Funcas Europe Director, and Carlos Carnicero Urabayen, Future is Blue host.
See also our weekly readings at the bottom of this newsletter.
New podcast episode available!
In today's Future is Blue podcast episode we cover the following key economic aspects of the EU's current agenda:
- Is Europe heading towards a recession along with persistent inflation –or stagflation?
- Will the labour market maintain its resilience?
- In light of these economic circumstances, and the need to address high debt levels, what could be a realistic fiscal scenario for the EU?
- The EIA is predicting a turn in energy demand, consistent with the need to fight climate change, echoing the recent G20 summit. What are the pre-requisites for this to happen in Europe?
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What we are reading
How Europe can make the most of AI?
AI may give Europe a chance to raise growth, especially in its lethargic services sector, claims this CER new paper.
European Union debt financing: leeway and barriers from a legal perspective
The paper investigates the legal feasibility of the EU borrowing on the capital market to finance European public goods.
Will higher interest rates leave economic scars?
Two new studies argue that even if they depress inflation, they could hurt innovation and growth.
ECB raises interest rates to highest level since euro launched
Central bank’s president hints this may be the peak for rates in drive to bring down stubborn inflation
Have a nice rest of the week.
Raymond Torres
Funcas Europe Director