The Chancellor of the Exchequer (Mr George Osborne)
The Economic and Financial Affairs Council was held in Brussels on 18 May 2010. The following items were discussed:
Ministerial dialogue with EU candidate countries
Ministers held their annual economic policy dialogue with the Finance Ministers and Central Bank representatives of the EU candidate countries: Croatia, the former Yugoslav Republic of Macedonia and Turkey. The Government support the conclusions agreed, which acknowledge the progress achieved by candidate countries in stabilising and transforming their economies.
Follow up to the 9 May extraordinary ECOFIN
ECOFIN held an extraordinary meeting on 9 May to address financial stability in Europe. Ministers from the previous Administration agreed a comprehensive package of measures including a European financial stabilisation mechanism of up to €500 billion with parallel support from the IMF. Ministers also expressed a strong commitment to ensuring fiscal sustainability and enhanced economic growth in all member states, and agreed that plans for fiscal consolidation and structural reforms would be accelerated, where warranted. They underlined the need to make rapid progress on financial market regulation and supervision, particularly in derivative markets and on the role of credit rating agencies.
As a follow up to the extraordinary meeting, Ministers took note of additional consolidation measures outlined by Spain and Portugal in their 2010 and 2011 budgets. The Commission will evaluate these measures in June within the framework of the excessive deficit procedure.
Alternative Investment Fund Managers (AIFM) Directive
ECOFIN reached a political agreement on the AIFM directive to establish a framework for monitoring the risks posed by alternative investment funds while allowing fund managers to market their funds throughout the EU single market. In a statement in the minutes of the Council, the Council notes the concerns expressed by some member states on certain aspects of the presidency’s proposed general approach, in particular as regards to the third-country provisions. It invites the presidency to start negotiations with the European Parliament on the basis of this general approach, taking into account the concerns expressed by member states.
Draft 2011 budget
The Commission presented its draft 2011 budget, including a total of €142.6 billion in commitment appropriations (+0.8% compared with 2010) and €130.1 billion in payment appropriations (+5.8% compared with 2010). For many member states, the EU has agreed that national budgets should be cut to meet consolidation targets and bring deficits under control. The Government believe that the proposed increases in the EU budget must therefore be reduced and a freeze in spending should be considered before the UK can give its agreement.
Economic policy guidelines
ECOFIN debated a draft recommendation on broad guidelines for the economic policies of the whole EU and for member states, aimed at implementing the Europe 2020 strategy for jobs and growth. The draft recommendation, together with a draft decision on guidelines for the employment policies of the member states, forms integrated guidelines setting a framework for structural reforms to be carried out by the member states. These will return to ECOFIN in June for agreement before being endorsed by the European Council on 17 June.
Enhanced economic co-ordination
Ministers held an exchange of views following a presentation by the Commission on enhanced economic policy co-ordination in the euro area and the EU as a whole. This formed the basis for further discussions at an EU task force chaired by President Van Rompuy on 21 May, where representatives from the 27 member states discussed the measures needed for an improved crisis resolution framework and better budgetary discipline in the EU.
The Government agree that one of the key lessons of the crisis is that ex ante surveillance of economies needs to be improved at both the domestic and European level. As a single market, co-operation and co-ordination must be maintained among all member states. The Government will be an active participant in this debate but have made it clear that when it comes to national budgets, the first port of call is not the Commission but national Parliaments.
Fiscal frameworks
ECOFIN adopted conclusions on fiscal frameworks promoting the strengthening of national fiscal frameworks by sharing best practice, regular assessments, peer review and credible fiscal bodies at the national level. The Government support the conclusions, which are fully in line with the announcements made on domestic fiscal reform, including the creation of the Office for Budget Responsibility.
Financial stability and crisis management
The Council adopted conclusions on EU crisis prevention, management and resolution in the banking sector. The UK supports the conclusions, which outline a number of short to medium-term priorities for developing common national tools for use in a cross-border financial crisis. ECOFIN will continue to discuss these principles in advance of legislative proposals in 2011.
Preparation for the G20 Finance Ministers
The Council discussed the 4-5 June meeting of G20 Finance Ministers and Central Bank Governors in South Korea. It endorsed terms of reference setting out the EU position for the meeting.
Commission financial services work programme
Commissioner Barnier presented the work programme for financial services legislation over the coming months.
Lunch
Ministers held a joint lunch with the Finance Ministers of the EU’s Mediterranean partner countries to discuss implementation of the Euro-Mediterranean Investment and Partnership Facility (FEMIP), and agreed joint conclusions endorsing ongoing close co-operation between the EU and its Mediterranean partners to facilitate economic growth and stability.