Eurogroup chair says Europe should act swiftly to protect economies if energy prices stay high

By Lefteris Papadimas

ATHENS, March 13 - Europe should act swiftly to contain pressures and protect its economies and citizens if high energy prices persist for a prolonged period because of the U.S.-Israeli war on Iran, the head of euro zone finance ministers said on Friday.

Oil prices are up about 37% since the start of the war, intensifying concerns over the inflationary impact and putting European governments under pressure to help households and businesses.

Kyriakos Pierrakakis, who is also Greece's finance minister, said the consequences of a prolonged conflict would inevitably be reflected in energy markets, transport costs, financial markets and ultimately in consumer prices.

"That is why it is important for Europe to act quickly and in a coordinated way to contain pressures and protect both our businesses, our citizens and our economies," he told Reuters in response to questions sent by email.

The European Union is examining energy taxes, network charges and carbon costs as possible areas for short-term measures to ease pressure on industries hit by high energy prices.

France, Greece and Poland this week introduced oil price caps and restrictions on profit margins, but strained finances in some major economies mean their firepower is limited.

Pierrakakis said recent profit caps introduced by Greece on fuel and food products would not have a "material direct fiscal impact on the budget" and so far there were no indications that tourism and investments - important drivers of Greece's economic rebound - had been affected.

GREEK ECONOMY 'STRONG AND RESILIENT'

He said Greece's budget had taken into account the worst-case scenario for the whole year.

"Even under such conditions, economic growth would remain close to 2%, which shows that the Greek economy remains strong and resilient," he said.

Pierrakakis said no one can predict with certainty how long the current crisis will last but that the European economy "has the capacity and the resilience to absorb such shocks."

The EU is planning to invest heavily in clean energy, infrastructure and energy grid projects, and is considering additional financing for small modular reactors (SMRs) to reduce its energy dependence on oil imports.

Pierrakakis called for faster moves to strengthen EU competitiveness.

"One of my foremost objectives therefore is the Savings and Investments Union. Well-functioning and competitive financial markets are crucial," he said.