MOTION FOR A RESOLUTION BY THE COMMITTEE ON ECONOMIC AND MONETARY AFFAIRS (ECON)

The End of Cheap Money: With the Household Index of Consumer Prices showing double digit inflation for the first time in decades, raising prices for consumers all over Europe, how should the European Commission and European Central Bank coordinate their fiscal and monetary policies to return to the ECB's target rate for inflation?

Submitted by: Inam bin Alam (FI), David Blank (SE), Jamina Bürge (CH), Leonita Deliu (Kirkkojär ven koulu), Karīna Drozdova (SE), Albin Elmquist (SE), Said Khalef (CH), Susanna Korpela (Turun normaalikoulu), Hsa Htoo Kʼpaw (Lauttakylän lukio), Isa Lundström Cavegård (SE), Emilia Malkov (Salon lukio), Anna Frolova (Chairperson, LV), Nella Salminen (Chairperson, FI)

The European Youth Parliament aims to achieve the inflation target rate of 2% annually, mitigate the negative repercussions of prolonged inflationary pressure, and decrease poverty and socio-economic inequality. By addressing these issues, we seek to recover stability and competitiveness, reduce the financial burden on Member States and establish a safety net for the socio-economic consequences of severe inflation, because:

A A s of Februar y 2023, inflation in the eurozone was 8,5%, remaining above the European Central Bankʼs (ECB) inflation target rate of 2%,

B. Inflation led to an increase in economic inequality,

C. Disruptions in global supply chains and volatile demand starting from the Covid-19 pandemic in 2020 led to an increase in prices,

D. There is inflation divergence between Member States, with inflation in Latvia being at 20,1% while being at 6,6% in Luxembourg,

E. Exchange rate fluctuations negatively affect international trade,

Turku 2023 – National Session of the European Youth Parliament Finland General Assembly, 10 April 2023

F. There are differences in compliance with the Stability and Growth Pact (SGP) among 8 Member States,

G. Russiaʼs invasion of Ukraine has put significant pressure on food and energy supply, which are both significantly contributing to the cost-of-living crisis,

H. The rising prices in relation to the overall cost of living have led to people struggling to afford basic necessities,

I. The trust of people in banks and most public institutions has further diminished in an inflationar y environment,

J. More businesses are now filing for bankruptcy coinciding with high inflation;

The European Youth Parliament,

1. Proposes the Council of the EU to reduce energy consumption costs for consumers and companies by introducing a price cap on energy, following the example of the price cap on gas;

2. Recommends Member States to reduce economic inequality by introducing progressive taxation measures while accounting for inflation;

3. Invites Member States to diversify key trade partners as a safety net against supply shocks;

4 Calls upon the European Commission to assist Member States experiencing higher inflation rates by creating Countr y-Specific Recommendations (CSRs) in the European Semester of 2023;

5. Suggests the ECB to regulate exchange rate fluctuations that could disrupt trade balance by being more involved in foreign exchanges, including but not limited to the United States (US) and China;

6 Instructs the Directorate-General for Economic and Financial Affairs (DG ECFIN) to create general guidelines for the coordination of fiscal and monetar y policies between Member States and the ECB;

8 The Stability and Growth Pact (SGP) is a set of rules aiming for the coordination of Member Statesʼ fiscal policies

Turku 2023 – National Session of the European Youth Parliament Finland General Assembly, 10 April 2023

7. Designates the European Commission to further promote energy independence through projects supporting the green transition, such as REPowerEU;

8. Further calls upon the European Commission to create CSRs for alternative spending schemes on matters such as healthcare, education, infrastructure, and militar y spending;

9. Encourages Member States to provide assistance to businesses heavily affected by inflation in the form of: a. governmental contracts, b. trainings helping them adapt to changing economic conditions;

10 Urges Member States to accelerate the adoption of the Directive on Adequate and Fair Minimum Wages in the European Union, including regular updates to the level of the minimum wage.

Turku 2023 – National Session of the European Youth Parliament Finland General Assembly, 10 April 2023