Brexit and COVID-19 behind rising cost of living says Finance Minister Clyde Caruana

The COVID pandemic and Brexit have led to rising costs of living in Malta, according to Finance Minister Clyde Caruana.

Speaking to journalists on Wednesday, the Minister cited pandemic-related disruptions and inflation related to Brexit as being the lead contributors to the rising cost of living.

However, Minister Caruana insisted that issues related to COVID are short-term, describing them as a “temporary factor”.

He added that as Malta “is a country which imports several goods from the UK, Brexit also gave rise to duty issues, thus automatically increasing prices”.

Additionally, he issued a scathing critique against those blaming unspecified alternative factors for the cost of living increase.

“If one thinks [that the two factors] can be ignored, set aside or believe that they are not the reasons as to why Malta is experiencing certain increases in prices, I think that person would be doing a disservice and showing a lack of maturity as well as intelligence in the subject”.

Asked how the Government intends to address the rise in the cost of living, he stated that a clear solution is evasive, and claimed that those who suggested a fix would be easy “are only acting in such a manner to play to the gallery”.

Addressing the situation surrounding the financially struggling Air Malta, Minister Caruana stated the Government would ensure that its operations remained active until the end of the year.

Discussions with the European Commission regarding the airline’s request for state aid are still undergoing.

As part of these negotiations, the Commission has been sent detailed information, including data on all daily flights, passenger numbers and expenses, he said.

European Union rules prevent Member States from providing financial assistance to any enterprise, whether private or state-owned, in order to preserve competition rules. However, these rules have been relaxed during the COVID-19 pandemic, especially for companies in the hard-hit tourism and aviation sectors.

Examples of state aid recently given the green light by the Commission include €120 million in state aid to Aegean Airlines, €290 million to Brussels Airlines, and €7 billion to Air France, by the Greek, Belgian and French Governments respectively.

In February, Mr Caruana warned that the airline was bleeding cash to the tune of €170,000 a day.