The interview was conducted by Eirini Chrysolora.

Would you say that the reduction path of euro interest rates has come to a halt? Under what circumstances should the ECB further loosen its monetary policy?

First, I would like to say, Europe and its citizens have reason to take pride in their achievements. We are currently in a good situation: inflation in the euro area is close to our medium-term target of 2 % and expected to remain there over the next years. This is a great accomplishment, given that three years ago our inflation rate was above 10 %. To be honest, I am convinced, that it never helps to speculate about future policy rates. However, based on the information currently available to us, I can affirm that our monetary policy stance is the right way forward. 

The high cost of living is probably the biggest problem facing Greek households, with inflation having been persistently higher in Greece than in the Eurozone until last month, when this was reversed. Why was the index running faster here and what should we expect in the future?

Let me first say, that all of Europe is in awe about the economic recovery this country and its people have mastered. Currently, several countries, including my own, are suffering from higher inflation rates in the services sector. Unfortunately, Greece was no exception. However, in September, preliminary (HICP) data released by Eurostat revealed a sharp decline in Greece’s inflation rate to 1.8 %. And what is even more encouraging is that the decrease was broad-based. This is good news for Greek consumers. However, there is no room for complacency. Across Europe the downward shift of inflation was driven in large part by a decline in energy prices. Consequently, there is a critical need to increase cooperation among member states to push for more resilience in the energy markets. I strongly support the European endeavour of a joint energy market. This would further strengthen the ties between our countries, with Greece leading in the renewables sector and the German industry keen on reducing energy costs.

Do you expect the German economy to recover in the foreseeable future? Will the current fiscal stimulus be effective, and what other reforms are needed for a faster recovery?

I have no doubts that public investments in infrastructure and defence will begin to impact GDP from next year onwards – it takes some time for the plans to be implemented. The crucial question, however, is whether these investments will spur growth in the long run. For this to happen, Germany also needs structural reforms. These reforms should increase the supply of labour, facilitate the necessary transition towards net-zero carbon emissions, and bolster a more dynamic corporate sector. Less red tape and faster, lean administrative processes are crucial for the political agenda in Germany. Such reforms are politically challenging and rarely popular. But Germany is inspired to lead its transformation to success and is continually seeking strong partners like Greece to support this endeavour.

What would be the consequences of a prolonged stagnation in the German economy for the rest of Europe and for Greece in particular?

Do you really want me to envision that? My vision is a different one. All forecasters foresee a solid growth rate in Germany from next year on. However, we do face significant challenges ahead. The Bundesbank estimates potential growth at 0.4 % for the coming years – one percentage point lower than over the past decade and one percentage point lower than in the EU excluding Germany. That worries me. The German government is taking measures, that will most certainly boost growth. But let me also say on a broader note: We are all, in Germany, but also across European borders, working intensively together to protect and enhance European competitiveness and thereby shield our shared values, which have their roots not far from here in the Agora of Athens. 

More than a year after the Draghi report, do you believe Europe has taken significant steps to improve its competitiveness? Is this a challenge that Europe can realistically win?

Let me address your last question first: what does it even mean to win? Our goal is to enhance and safeguard the living standards and welfare of European markets and citizens. Can we achieve this amidst the currently volatile geopolitical environment that we live in? Yes, we can. We all see the need to act. We are all willing to act together and reduce fragmentation to boost competitiveness. Europe requires its own future-minded strategy. We see immense technological progress in many fields, from artificial intelligence to clean technologies. We need to crowd in capital to scale up the innovative businesses and brilliant ideas our bright minds are developing in Europe. It is our responsibility in Europe to take an active role in shaping the burgeoning sectors of the future. To sum up: we are working on many fronts to tackle the issues Mario Draghi rightly highlighted. 

How severe will the impact of US tariffs be on the European economy, and on Germany in particular?

What we have seen so far is that European companies have skillfully managed the situation, despite its challenges. Clearly, going forward, we need strong alliances and particularly have to focus on our resilience, for instance in the field of defence. While we should work eagerly to improve Europe’s capabilities and increase its autonomy, our relationship with international partners, who share our democratic values, remain of utmost importance.

The Governor of the Bank of Greece, Yannis Stournaras, has said that, given growing international uncertainty, Europe could become a safe haven for investors. Do you agree? Under what circumstances could Europe achieve this?

Yes, I agree with my esteemed colleague. Like Greece, several countries have made significant strides over the past decade. The euro area as a whole has also become safer and more reliable. When the banking systems in the United States and in Switzerland saw major disruptions two years ago, the European banking sector proved stable. But Europe can do more to strengthen its stance and quality in the eyes of investors. And it has a project for this: the savings and investments union. 

Will the EU continue to function as a union of solidarity, supporting its weakest regions and countries, or do you expect it to take steps backward in the future?

Well, I suppose the most pragmatic and logical answer to this question is that the majority of Europeans recognize that we are much better off in a Union. We are currently witnessing war, trade inhibitions, and political instability across the world. As human beings, we naturally strive for safety in an insecure environment. This is also confirmed in the Eurobarometer survey among the citizens of the European Union. It shows that trust in the EU and the European Commission is at its highest level in 18 years. If something good can be drawn from the increasing geopolitical tensions and headwinds, it is that Europe has come closer together and the willingness to address the central challenges is growing.

On a more personal note, I believe it might be more than that: as Europeans, we have endured many challenges together over the past decades. And we have learned to trust each other. Trust is our most valuable currency in Europe. 

How would you evaluate Greece’s economic progress since the crisis period?

I said it in my speech here in Athens yesterday: Greece’s economic performance has been impressive. GDP is growing solidly as ELSTAT data shows, the labour market has shown remarkable improvement, and the public debt ratio is declining. Through the testimonials of my friends in this country I am aware that recent years have been a tough time for many in Greece. It is remarkable what has been achieved. And as I said, this success may serve as an example and give courage, also for my country.

What do you see as the main challenges currently facing the Greek economy? Do you have any concerns about its future?

I just want to wish the Greek economy all the best to maintain its momentum, to continue to grow, and to tackle the challenges of our time. And to always be assured that, as Europeans, we stand united in facing these challenges.

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