The Chancellor of the Exchequer (Mr George Osborne)
The Economic and Financial Affairs Council was held in Brussels on 8 November 2011. The following items were discussed:
Financial Transaction Taxes (FTTs)
The Commission presented its proposal on FTTs. Under the proposal, the tax would apply where at least one of the parties to the transaction was established in a member state. The tax rate would be 0.1% of the value of equity and bond transactions, and 0.01% on derivative contracts on the notional value of the transaction. I made it clear that the Government do not support the Commission’s proposal. As stated in the Commission’s own assessment, it would reduce growth and cut jobs. Other member states, including Bulgaria, the Czech Republic, Italy, Luxembourg, Latvia, the Netherlands, Romania and Sweden also voiced concerns with the current proposal. I asked the presidency and the Commission to work on a timetable to resolve this issue quickly, as it was clear that the Council would not be able to reach unanimous agreement on this proposal. The presidency noted the request for a fast resolution, and suggested the working group meeting on 5 December should consider options and alternatives to put to Ministers for further consideration.
Energy Taxation Directive (ETD)
The presidency decided to remove the orientation debate on the ETD from the agenda. This directive would require member states to tax energy products by taking into account both CO2 emissions and energy content. Discussion will continue with officials at working group level.
Follow up to the October European Council. 23 October and Informal meeting of EU Head of State or Government on 26 October
Ministers discussed the banking package that was announced on the 26 October by EU Heads of State and Government. The discussion focused on all three aspects of the banking package: access to term funding for banks; bank recapitalisation; and state aid guidelines. I made it clear that the Government would support co-ordinated national guarantee schemes, where appropriate, to support banks accessing term funding. However, the Government could not support a scheme which placed euro area bank liabilities on the UK. I underlined the importance of the bank recapitalisation aspect of the package. This should be undertaken while mitigating the risk of deleveraging. I also emphasised that the state aid rules should continue to apply fully. As a next step, the Council asked the Economic and Financial Committee to explore the options for addressing the issues related to access to term funding.
Follow up to the G20 summit 3-4 November in Cannes
Ministers discussed the outcomes from the G20 leaders’ summit held in Cannes on 3-4 November. The outcomes from the summit include: an action plan for growth and jobs; building a more stable and resilient international monetary system; reforming the financial sector; promoting more efficient commodity markets; strengthening the international trading system; and addressing climate change and development challenges. The G20 agreed that additional resources for the IMF could be mobilised in a timely manner; Finance Ministers will work on deploying a range of options by their next meeting.
Financial assistance to Greece—disbursement of next instalment
The presidency removed this item from the agenda. Euro area countries and the IMF made it clear that they would not disburse the next instalment of the Greek financial assistance programme until there was greater certainty about the new Greek Government. Once the new Government have endorsed the measures to put Greek debt on a sustainable footing, as agreed at the informal meeting of EU Heads of State and Government on the 26 October, the sixth tranche can be disbursed.
Economic governance—surveillance of macroeconomic imbalances: design of the “scoreboard”
The Council agreed conclusions on the scoreboard for assessing macroeconomic imbalances. Ministers agreed that current account surpluses would not lead to sanctions. Ministers also agreed the scoreboard for the excessive imbalances procedure. The Government support these measures as they will help to restore and maintain macroeconomic stability in the EU. The six-pack on economic governance, including the scoreboard, will be implemented in mid-December.
Preparation of the 17th Conference of Parties (COP-17) of the United Nations Framework Convention on Climate Change (UNFCCC) in Durban. South Africa
ECOFIN agreed conclusions on climate change in preparation for the UN conference in Durban, 28 November to 9 December. The conclusions endorse a report on finance provided by the EU and its member states as part of their “fast start” commitments. These commitments will aid climate mitigation and adaptation measures in developing countries.
Annual Meeting of EU and European Free Trade Association (EFTA) Economy and Finance Ministers
This meeting took place before the formal ECOFIN, and discussed improving regulation to secure financial stability. The Commission outlined the comprehensive response that was set out at the informal meeting of EU Heads of State and Government on 26 October. The President of the European Central Bank, made it clear that the Basel III rules on capital requirements for banks should be minimum, not maximum requirements. There is a risk that banks might deleverage as a consequence of the current economic environment and uncertainty about capital requirement rules. Following this, there was a roundtable discussion with Finance Ministers from Liechtenstein, Iceland, Norway and Switzerland. EFTA countries shared their views on the recent financial crisis and economic developments in euro area countries, and the impacts of these on their own economies.
Follow up to the Eurogroup meeting, 7 November
Ministers discussed political and economic developments in the euro area, as a follow-up to the Eurogroup meeting. I underlined that the deterioration in the euro area was having a huge impact on the UK and other non-euro area countries. As such, all 27 countries have a strong interest in the situation being resolved. I made it clear that the euro area needed to give more detail on how they would implement the package agreed at the informal meeting of EU Heads of State and Government on the 26 October.