Thank you, Paschal. Let me start with a few words on the euro area economy.
Gradual, moderate expansion is continuing. GDP grew by 0.5% in the first half of the year. Labour markets remain historically strong. Inflation has just fallen below the ECB's target of 2% for the first time in more than three years – it was 1.8% in September – mostly driven by lower energy prices: good news for the purchasing power of households that had been weakening.
At the same time, investment and construction are underperforming. Manufacturing is sluggish. Global trade prospects have weakened. And the geopolitical situation remains very strong.
Today marks the first anniversary of Hamas' horrific attacks against Israel. The prospects of a further deterioration of the conflict are deeply concerning. Add onto this the ongoing war in Ukraine, which will soon reach the grim milestone of one thousand days of Russian invasion. So the uncertainty surrounding this economic outlook remains exceptionally high. And we saw this already materialising in oil prices.
We will factor in all these elements in our Autumn Forecast, which we will release on 15 November.
We had a large discussion on competitiveness, enriched by the reports of Enrico Letta and Mario Draghi. There is no doubt that competitiveness will be a key word in the coming years for finance ministers and for the Commission.
I think we are converging towards a common understanding of the main challenges we face: on the need to raise productivity and innovation. On the importance of the Single Market. On the imperative of affordable energy prices. On the massive financing needs for our common priorities.
When it comes to tackling these challenges, there are those that point to the need for structural reforms at national level, market-led solutions, lower regulatory burden, emphasising the role of private financing. On the other hand, there are those that argue for a more active industrial policy, common investments, and a stronger EU budget.
I have to say that both these visions have merit and we will actually need both. Not easy to combine both. We need reforms, and we need investments. We need to cut red tape, and we need a more active role for governments in key strategic sectors – and better if we take a European dimension.
On the financing side, private investment should be the priority, supported by a more developed Banking and Capital Markets Union. This is an area where progress has not been fast enough. Today we heard from Nadia Calvino, the EIB President, on how the EIB can support start-ups and mid-size companies throughout the growth cycle and facilitate access to capital markets.
Aside from private financing, there is also a clear need for public financing at EU level, both to support projects of common European interest in areas like innovation, defence and the green and digital transition, but also to avoid the risks of fragmentation among Member States.
I think that today's discussion brought us closer to the finalisation of a Eurogroup statement that the Commission strongly supports.
Finally, on the digital euro, we've heard from the ECB about the latest developments in the payments area, which highlight the importance of for Europe to develop its own strong digital payments system to ensure resilience and autonomy.
As you know, the legislative process on our proposals to establish the digital euro and, in parallel, to clarify the legal tender status of euro cash is still ongoing. So today was also an opportunity to take stock of where we stand.
