During the 2008-2012 financial crisis, huge efforts were deployed to prevent banks from collapsing. They succeeded. It was decided that banks should be monitored to ensure that there would be early warning of problems that could arise and that they could be overcome. For this, what are called “stress tests” were devised.

These consist of scenarios drawn up to cover what could happen if many of the conditions under which banks operated deteriorated greatly. From this the extent to which banks were in a position to survive when the going got really bad could be estimated.

I believe the time has come for stress tests to be also conducted regularly on a country’s infrastructure (supply and delivery of electricity, water, drainage, communications...) Over great stretches of Europe, including Malta, it seems that the infrastructure is not coping well with the challenges (let’s call them so) that are emerging. Like with the shifts and increases in populations. The increase and changes in consumption patterns. And above all, climate change: not just the heat waves but equally the bad weather, the floods, the fires, the tides, the tornadoes...

***

SUBSIDIES

The estimate that the government has worked with regarding how much it needed to spend this year on energy subsidies is turning out to have been way too high. It is going to be substantially less because oil prices have gone back down to where they stood before the Ukraine war. As a result the spend on subsidies has declined to zero.

This will be affecting significantly the financial options open to the government. It provides fiscal room within which the government can decide whether to ride on current outcomes in order to cut the deficit it is carrying, or whether it should still spend the monies allocated to subsidies that have been “saved”. Perhaps it would be more prudent to put aside what will not be spent. If it is still decided to spend the subsidy allocation, one would have to decide whether to do so on the public investment side or just for ongoing consumption. Government consumption is already rising at a rate that could quickly become unsustainable.

***

CHANGES

Changes to eurozone rules that are being prospected will not make some spectacular difference to the manner by which the zone is being run at present. What stands out in them (and has generated most controversies) is how decisions are to be taken over the corrective measures that countries which are running off the track would need to take.

The automatic procedure which supposedly should be followed would need to be converted into one that is laid out according to each case as it arises. But would this not introduce a dangerous measure of political subjectivity? Would there not still be a need for an objective yardstick that would apply to all without exception? The arguments about these issues have multiplied.

In truth, it has also happened up of now, that euro management rules were observed only on paper (always depending on which country happened to be in the dock). The debate is so technical that it mostly involved ministers of finance plus European political observers and members of parliament. The public in general took no notice at all.