The Chancellor of the Exchequer (Mr George Osborne)
The Economic and Financial Affairs Council was held in Luxembourg on 20 June 2011. The following items were discussed:
Legislative proposals on economic governance
The Council updated its general approach, with a view to concluding negotiations with the European Parliament in advance of the European Council on 23-24 June. The UK is content with the updated text: on the issue of economic dialogue involving the European Parliament, I ensured explicit text that member state attendance at public debates and hearings would be voluntary. In addition, the UK’s partial opt-out from the fiscal frameworks directive remains protected.
Proposal for a Decision of the European Parliament and the Council granting an EU guarantee to the European Investment Bank (EIB) against losses under loans and guarantees for projects outside the EU
The Council endorsed the outcome of the trialogue discussions (Council, European Parliament and Commission) on the EIB’s external lending mandate. This political agreement will, with the EP, be formally adopted later in the year. During the Council discussion, I emphasised the importance of Iceland repaying the money it owes to British and Dutch taxpayers. The following Council statement was then agreed to accompany the mandate:
“The Council takes note of the issuance of the reasoned opinion of the EFTA Surveillance Authority (ESA) which states that Iceland has failed to comply with obligations resulting from the Deposit Guarantee Directive and the EEA Agreement. The Council underlines the importance of this reasoned opinion and encourages Iceland to take all steps necessary to swiftly fulfil all its EEA obligations”.
Regulation on over-the-counter derivatives, central counterparties and trade repositories (EMIR)
Finance Ministers held a policy debate, which focused on two issues:
The authorisation and supervision of central counterparties, in particular the role played by the European Securities and Markets Authority;
The scope of the regulation, That is, whether it should apply to all types of derivatives.
I emphasised that further work would be needed to achieve a regulation consistent with G20 commitments, single market principles and the agreement on the establishment of the European supervisory authorities last year. The Hungarian presidency will pass on a progress report to the Polish presidency, who will aim to agree a general approach following further work by the Council.
Proposal for a Regulation of the European Parliament and the Council establishing technical requirements for credit transfers and direct debits in euros
The Council briefly discussed the draft regulation. Some member states raised concerns, and the Commission agreed to work on a transitional process in order to address these. The Polish presidency will start negotiations with the European Parliament shortly. The UK supports the proposed regulation, which will facilitate the creation of a single market for electronic payments in euros.
European Semester
The Council approved the macro-economic component of the European semester country-specific recommendations. The Government expressed concerns about a lack of time for parliamentary scrutiny and abstained from the vote accordingly. The recommendations will be endorsed by the European Council on 24 June as Council recommendations, and formally adopted by the ECOFIN Council on 12 July,
European Banking Authority stress testing
Over dinner, Finance Ministers discussed backstop support schemes in the banking sector, with a view to the publication in early July of the results of the 2011 stress tests. The Government support the implementation of coherent and transparent measures to address any vulnerabilities in the EU’s banking system,
European Stability Mechanism (ESM)
In an inter-governmental meeting preceding ECOFIN, Finance Ministers discussed the draft treaty establishing the ESM which will be presented to the European Council for endorsement. In particular, it was agreed that the ESM would not assert preferred creditor status in the case of countries currently in receipt of assistance, should those member states access ESM funding post-2013. I also secured the removal of any language with respect to collective action clauses that might impact on the ability of euro area member states to issue debt under English law.
The Government’s opposition to the use of the European financial stabilisation mechanism for any second package of financial assistance for Greece has been made clear.