The threat of accelerating inflation and low growth in the euro zone is becoming increasingly daunting. The IMF has recently reduced the growth projections for the euro area for both 2008 and 2009. At the same time Eurostat has picked up clear signs that inflation is accelerating rapidly.

The strength of the euro, the weakness of the dollar, the increase in the price of oil and that of grains and cereals, are among the issues that make the future of EU economies that much more uncertain. It seems that the only companies that are doing relatively well in the world economies at the moment are those in the oil and commodities sector.

In Malta we are beginning to feel the cold air blowing from the western developed economies. It is sad to hear about the uncertain prospects of the flagship of our manufacturing industry, ST Microelectronics. The strong euro and the inevitable competition from low-cost countries as a result of globalisation are making the local branch of this electronics giant look alarmingly shaky. We earnestly wish that this company would strike a deal with the workers representative to avoid job losses. Even if a solution may prove to be very painful, it will surely be more bearable than declaring workers redundant.

The announcement of results by various local banks seems to indicate that most of the local financial operators are doing well. HSBC, APS and Lombard Bank announced good results, while BOV confirmed that it has been badly hit by the turmoil in the international markets. Surely this latter bank needs to do some soul searching to explain why the mid-year results were so disappointing when compared to the other major local banking operators. They may need to revise their investment strategy to reduce concentration in the sectors that have underperformed so much in the last several months and have affected their results so badly.

But banks in Malta have a privileged position and the MFSA needs to ensure that this dominant position is not abused. Our banks, as indeed all banks worldwide, must be fair and clear in the way they deal with their clients, most of whom are involved in activities that drive the real economy.

Recently, Mr Justice Andrew Smith presiding in the High Court in London allowed the Office of Fair Trading to press ahead with its investigations to determine whether banks can legally charge customers who slip into the red without prior arrangement. This is the way regulatory bodies can and should protect the interest of the consumers.

I understand that, rightly so, the MFSA has also referred to the local competition regulators a number of alleged charging irregularities by banks. One hopes that these cases are investigated seriously and that decisions are communicated publicly so that the consumers feel reassured that no one abuses one’s dominant position in the market.

The battle against inflation and the corrosive effect that it has on the purchasing power of Maltese families has to be fought on all fronts. No matter is too trivial, because if abuses by providers of goods and services are left unchecked, the belief will grow that one can get away with overcharging because the regulatory authorities are complacent.

It is difficult enough coping with spiralling costs of imported goods and services because we cannot realistically affect the prices of what we buy from abroad. We now need to empower our people to react to local abuse in pricing and to ensure that our regulators use the power giver to them by law to guarantee that consumers are treated in a fair and clear way.

When we control the negative effects of inflation with all the tools we have at our disposal, we will be making life easier for ourselves when it comes to improving our competitiveness and stimulating economic growth. There should be political agreement on the need to fight abuse that has an impact on inflation, but more important there should be an unwavering political will to stamp abuse wherever it comes from.

One hopes that MCESD will probe deeply into this vital matter for the benefit of our economic growth and the well being of our families. The issue needs to be studied from all perspectives objectively, devoid of political overtones and interest – the only interest should be the well being of our country.

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