Crisis of confidence due to price increases.
(Photo: imago images / ZUMA Press)
Prices in Europe are rising and rising, and citizens are becoming increasingly nervous. The talks also focus on inflation at the meeting at which the EU economics and finance ministers are currently meeting in Brussels. However, little has changed in communication between the European institutions.
No need to worry, the surge in inflation will not last, so it has been said from Frankfurt and Brussels for months. The European Central Bank (ECB) and the EU Commission do not want to stir up panic. But they appease in a way that costs trust.
The last inflation rate in Europe was 4.1 percent. This is more than many experts expected and requires a political response, not business as usual.
The US Democrats recently learned that trying to convince citizens that their fears are primarily a product of their imagination is not a particularly promising recipe. They suffered a heavy defeat in the elections in important states, although the opposition Republicans have little to offer besides slogans.
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This is a warning for Europe, especially for French President Emmanuel Macron, who is up for re-election in April.
Fear of creeping dispossession
It is no coincidence that the government in Paris is particularly creative in easing price pressure. Low-wage earners should receive compensation of 100 euros.
Macron knows: there is hardly an economic topic that is as suitable for populist vote-catchers as the fear of creeping expropriation through rising prices.
The tabloid campaign against ECB boss Christine Lagarde in Germany shows how quickly the economic debate can turn into ugly public opinion.
There is still a lot to suggest that price pressure will ease in the coming year once the pandemic-related production bottlenecks have been overcome. But attempts at monetary policy instruction by the technocrats in the ECB and the Commission are a clumsy answer to the growing concerns of citizens.
It would be more reassuring to say that the danger has been recognized and that a plan B is ready.
More: ECB Chief Economist: Don’t overreact because of high inflation