The Minister for Finance has said the EU will do all it can to maintain stability and security of energy supplies, were the tensions between Russia and Ukraine to escalate any further.

But Paschal Donohoe, who is also President of the Eurogroup, said all the efforts of the many countries involved continue to be focused on trying to get a diplomatic solution.

"Were things to escalate any further, yes I am confident the EU will do all that can be done," Mr Donohoe told the Financial Times and IDA Ireland European Financial Forum 2022.

"But of course, even with what their efforts would be, there would still be economic consequences and there would be effects on our access to the energy and risks that we could face because of that."

Mr Donohoe predicted that if the situation becomes even more grave, the EU will respond in ways that it can to help Ukraine economically.

He also added that there would be discussion and focus on the possible need for compensatory action for EU member states, should there be a downstream effect from potential sanctions being imposed on Russia or counter sanctions that might follow.

"Before we get to that point, of course, where our energies continue to be is in avoiding being in a situation where such sanctions are necessary," he claimed.

"But if they are necessary, I think you will see the EU act in a very co-ordinated way and respond back with a set of measures that will reflect the severity and the deep seriousness of the situation that could develop in the east of Europe."

Regarding the impact of inflation and how to deal with it, Mr Donohoe said eurozone finance minister will be seeking to decide what is the right level of fiscal and budgetary support they want in their economies at this phase of recovery from Covid.

Then within that level of budgetary support, he said, they will have to decide how to allocate national resources so as to get the balance right between not adding to inflationary pressure in any way but also helping those homes and businesses most impacted by the very severe change in the price of energy.

Asked about growing sovereign spreads on international markets, he said it comes from a very very low base.

That lowness, he claimed, is a consequence of the success of the monetary and fiscal policy in place, and to a degree it was expected.

Mr Donohoe added that he is very confident of the ability of the economy of the euro area to be resilient and for member states to be able to access funding under normal conditions.