After headline inflation had already reached very high levels in the United States in the first half of 2021, euro area inflation also recorded a very rapid increase in the second half of the year but remained much lower than in the United States. Comparing inflation developments in both economic areas could help to separate idiosyncratic factors from those related to the cyclical position, taking into account the fact that the euro area is lagging the US cycle. By...

'Using an alternative measure may help separate the signal from the noise.' Economists debating inflation in the United States are confronting a difficult challenge: stripping out volatile price changes to gauge underlying pressures. The most common measure of underlying or “core” inflation, which excludes volatile food and energy prices, has been hard to read during the pandemic. The traditional measure came into wider use in the 1970s, when volatile energy prices caused inflation spikes. Our research shows that...

Following the agreement reached in October 2021 by over 135 members of the OECD/G20 Inclusive Framework on BEPS to a two-pillar solution to address the tax challenges arising from digitalisation and globalisation of the economy, work on the implementation of the two-pillar plan is well underway. As part of this next phase, the Inclusive Framework will consult stakeholders on a number of aspects of Pillar One and Pillar Two over the coming months. Pillar One For Amount A of Pillar One,...

In ordinary times, Europeans save around 12 percent of their income. But as families stayed at home and furlough schemes supported income during the pandemic, this savings rate increased sharply to almost 19 percent in 2020 and 2021. As shown in this Chart of the Week, we estimate that households in the euro area saved nearly 1 trillion euros more in those two years than they would have done if the pandemic never happened. In other words, people saved a...

The Winter 2022 Economic Forecast projects that, following a notable expansion by 5.3% in 2021, the EU economy will grow by 4.0% in 2022 and 2.8% in 2023. Growth in the euro area is also expected at 4.0% in 2022, moderating to 2.7% in 2023. The EU as a whole reached its pre-pandemic level of GDP in the third quarter of 2021 and all Member States are projected to have passed this milestone by the end of 2022. Economic growth...

Why a European Chips Act? Semiconductor chips are the essential building blocks of digital and digitised products. From smartphones and cars, through critical applications and infrastructures for healthcare, energy, communications and industrial automation, chips are central to the modern digital economy. The COVID-19 pandemic has exposed a weakness in the eco-system within both Europe and other regions in the world experiencing significant shortages of chips. EU industries manufacture many types of high-tech products, of which chips are essential parts. Europe must...

Today, the Commission proposes a comprehensive set of measures to ensure the EU's security of supply, resilience and technological leadership in semiconductor technologies and applications. The European Chips Act will bolster Europe's competitiveness, resilience and help achieve both the digital and green transition. Recent global semiconductors shortages forced factory closures in a wide range of sectors from cars to healthcare devices. In the car sector, for example, production in some Member States decreased by one third in 2021. This made...

Introductory statement by Christine Lagarde, President of the ECB, at the Hearing of the Committee on Economic and Monetary Affairs of the European Parliament (by videoconference) | Frankfurt am Main, 7 February 2022 | On this day in 1992, the leaders of twelve European countries decided to transform the European Community into the European Union by signing the Maastricht Treaty. Thirty years on, Europe continues to benefit from many of the accomplishments of that Treaty. The Treaty established European citizenship, including...