The Chancellor of the Exchequer (Mr George Osborne)
The Economic and Financial Affairs Council was held in Luxembourg on 4 October 2011. The Financial Secretary and I represented the UK. The following items were discussed:
Regulation on over-the-counter derivatives, central counterparties and trade repositories (EMIR)
Prior to the meeting, the Government were clear that the regulation as it stood was unacceptable. In line with concerns raised previously by the European Union Committee, I therefore made it clear that a number of changes to the text were needed, including:
in order for the college to block an authorisation of a central counterparty (CCP), all members of the college, excluding the relevant National Competent Authority (NCA), must vote against it;
wording in an article that would forbid any decisions on CCPs being made on a basis that would discriminate against any member state as a venue for clearing services in any currency;
in order to foster competition, provisions requiring open access to CCPs and trading venues for over-the-counter (OTC) derivatives, as well as a public statement from the Commission that full fair and open access would be dealt with properly in forthcoming legislation;
a public declaration that the issue of scope and adequate coverage to meet the G20 agreement would be dealt with in upcoming legislation; and
a clear statement that the drafting of third country provisions required further work, which will be completed in the context of negotiations with the European Parliament.
With these conditions met, the Council agreed a general approach. The presidency, on behalf of the Council, will now start negotiations with the European Parliament, with a view to reaching agreement at First Reading.
Legislative proposals on economic governance
The Council agreed to a compromise text on the package of six legislative proposals. The Government are content with the package, which will strengthen economic governance in the EU, while respecting the UK’s fiscal sovereignty. The Council will formally adopt the proposals without further discussion once the texts have been finalised in all official languages.
European Central Bank (ECB): nomination of an executive board member
The Council adopted a recommendation on the nomination of Jörg Asmussen to the executive board of the ECB, to succeed Jürgen Stark, who announced his resignation on 9 September. The Government are content with this recommendation; matters related to the ECB are for euro area member states to decide. The Council’s recommendation will be submitted for a decision to the European Council, after consulting the European Parliament and the ECB’s governing council.
Information on the informal ECOFIN meeting
The presidency gave a de-brief of the September informal ECOFIN, and presented a proposal for the ECOFIN Council to assess the impact of new EU legislation on growth and jobs. This was then discussed over lunch, with the Government offering support. Officials will now produce a formal proposal, which will be discussed at a future ECOFIN.
Review of the fiscal exit strategy
Finance Ministers agreed Council conclusions on the implications of lower growth on excessive deficit procedure and stability and growth pact targets. The Government support these conclusions, which are in line with domestic fiscal policy and the emerging international debate on differentiating fiscal strategies between countries. The conclusions will feed into the European Council debate on EU growth on 23 October.
Implementation of the Excessive Deficit Procedure (EDP)
ECOFIN held an exchange of views on implementation of the EDP following recent developments. The Government welcome the emphasis on ensuring that all member states fully implement budgetary strategies for timely meeting of fiscal targets. The Commission will provide a more comprehensive analysis in their autumn forecast.
Follow-up to the IMF Annual Meetings on 24 September 2011, and the G20 Finance Ministers and Central Bank Governors’ meeting on 22 September 2011
The Council was informed by the presidency and the French delegation, in its capacity as G20 presidency, of the outcome of the meetings.
Preparation of G20 Finance Ministers and Central Bank Governors’ meeting on 14-15 October
The Council endorsed the EU terms of reference, which will form the basis of the EU’s contribution to the meeting of G20 Finance Ministers on 14-15 October. The Government are content with the terms of reference, which emphasise the need for determined action to maintain financial stability, restore confidence, and support growth. The G20 meeting is expected to cover the following issues: responding effectively to the current challenges in the global economy through the G20 framework for growth; financial regulation; commodities; reform of the international monetary system; and climate change financing and development.
Preparation of the UN Framework Convention on Climate Change (UNFCCC). Durban
Finance Ministers adopted conclusions on climate finance ahead of the Durban conference of the parties to be held 28 November to 9 December, 2011. The Government support these conclusions which reflect our position on climate finance.
Economic situation
Over breakfast, Finance Ministers received a de-brief of the previous evening’s Eurogroup meeting, and held an exchange of views on the economic situation. I emphasised the importance of the euro area delivering a truly comprehensive solution to the situation in the euro area, which ring-fences vulnerable euro area countries, recapitalises Europe’s banks and resolves uncertainty about Greece, ahead of the G20 summit in Cannes on 3-4 November.