The European Commissioner for the Economy, in an interview with Lusa news agency, advised Portugal to be “cautious with public spending” and to support public investment at a time of economic pressure due to geopolitical tensions caused by the war in Ukraine.
“I think that being cautious in public spending and strongly supporting strategic investment is the way forward and Portugal has been, in recent times, a good example from this point of view,” said Paolo Gentiloni, when asked by Lusa about the effects of the confrontations and European sanctions on Russia on the economies of smaller countries, such as Portugal.
He stressed the “need to have what is called a globally neutral budgetary position”.
“We stress the need to focus budgets on not increasing current expenditure, but rather supporting public investment, and this seems particularly important for countries with a relatively high debt,” noted Paolo Gentiloni.
“I think that, for Portugal, this means continuing with a strategic policy that has been followed by the Portuguese Government for some years, in an attempt to increase the country’s competitiveness through innovation”.
For the Italian politician, “this has been one of the main choices of the Lisbon government in its growth model”.
The position comes at a time when the EU is adopting heavy sanctions against Russia, such as freezing the financial assets of the Russian regime, including the President, Vladimir Putin, banning several Russian banks from using the Swift financial transactions system, imposing limits on the export of certain raw materials, cutting off the issuing of visas and closing European airspace to Russian aircraft.
The aim of these restrictive measures is to isolate the Russian economy and cut off the flows of money that support the war the Kremlin has started against Ukraine, but the European Commission admitted today that such sanctions will also weigh on the EU economy, predicting higher inflation and rising energy prices.
Inflation has been hitting record highs and in February reached a new high of 5.8% in the eurozone, up from 5.1% the previous month and 0.9% in February 2021, according to an estimate released today by Eurostat.