Kyriakos Pierrakakis, Minister of National Economy and Finance and President of the Eurogroup, expressed concern about the state of the European economy amid the crisis in the Middle East, upon arriving at today’s Eurogroup meeting in Nicosia.
At the start of the meeting, Mr. Pierrakakis described Cyprus as a “beacon of stability and security in the Eastern Mediterranean, ” noting that the country has proven it can turn crises into opportunities and continuously strengthen its geopolitical and economic role.
Warning on the energy crisis and the Strait of Hormuz
The Finance Minister warned that Europe is facing intense stagflationary pressures, noting that growth forecasts are being revised downward and inflation estimates upward.
The Eurogroup President emphasized that Europe is already facing the consequences of the new energy crisis, with the Commission’s updated forecasts pointing to lower growth and higher inflation.
“There is stagflationary pressure, but Europe is resilient,” he stressed, clarifying, however, that the situation requires careful handling so that the energy crisis does not turn into a fiscal crisis.
He made a special reference to the Strait of Hormuz, warning that if the crisis drags on, the repercussions will intensify in the coming months.
“If the Strait of Hormuz does not open in June, June will be worse than May, and July worse than June,” he noted.
Finance Minister Proposes “Targeted” Support Measures
Mr. Pierrakakis emphasized that the support measures being considered at the European level should be“temporary, targeted, and tailored measures that align with our long-term energy policies.”
“What the IMF recently presented is that the measures we have implemented in our energy policies since 2020 have allowed us to reduce the impact by 12%, given what has happened overall in the Middle East and in our economies,” henoted .
“We must be precise in our actions,” he stated, noting that the primary goal remains protecting the most vulnerable households without disrupting fiscal stability.
Housing and the Digital Euro on the Agenda
Mr. Pierrakakis also revealed that today’s Eurogroup agenda includes two additional critical issues: the housing crisis and the Digital Euro.
Regarding housing, he noted that, although it is primarily a national responsibility, Europe’s finance ministers cannot ignore an issue that directly affects social cohesion and the economy.
“Housing is a matter of social cohesion but also an economic issue,”he noted.
Regarding the Digital Euro, Kyriakos Pierrakakis noted that the European Central Bank has set 2029 as the target date for implementation.
At the same time, he revealed that Aurore Lalucq, Chair of the European Parliament’s Committee on Economic and Monetary Affairs, also participated in the meeting to discuss the parliamentary timeline for the adoption of the Digital Euro.
“For us, ‘Digital Europe’ is a matter of financial sovereignty and a matter of constitutional importance for strengthening the international role of the euro,” he noted, explaining that the digital transition, the energy crisis, and economic resilience are now directly linked to the new European agenda.
Concluding his remarks, the Eurogroup President argued that the European economy is facing clear stagflationary pressures, though it is not yet in a state of stagflation.
As he emphasized, the Commission’s latest economic forecasts continue to show positive growth rates, despite pressures from energy, inflation, and geopolitical instability.
“The key word for Europe is resilience. We must build on that,” he said.